Assume the following information about a given inventory ite…
Assume the following information about a given inventory item. Annual demand = 8,400 Holding cost = $5 / unit / year Working days per year = 280 days Order cost = $120 Average daily demand = 30 units Average lead time = 8 days Standard deviation of daily demand = 4 units Standard deviation of lead time = 2 days Also assume that decisions have already been made to have a safety stock of 20 and an order quantity of 1200. The total annual holding costs for this item would be:
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