Order Description
Given the following information, formulate an inventory management system. The item is demanded 50 weeks a year.

Item cost $10.00 Standard deviation of weekly demand
Order cost $250.00 Lead time 25 per week
Annual holding cost (%) 33% of item cost Service probability 1 week
Annual demand 25,750 95%
Average demand 515 per week

a. State the order quantity and reorder point.
b. Determine the annual holding and order costs.
c. If a price break of $50 per order was offered for purchase quantities of over 2,000 would you take advantage of it? How much would you save annually?