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Unformatted text preview: stock enough for double the shipment time needed by the supplier How would you advise the store manager of the best inventory management system? Hint: The basic criteria for an efficient inventory management system are: Economic Order Quantity Optimal Reorder Point Those criteria secure the most cost effective SCM in light of the above data. Solution - The basic Economic Order Quantity (EOQ) formula is as follows: Annual demand =annual usage = 200 x365=73000 units Setup cost = order cost = SR 40 Holding cost=carrying cost =SR 4 EOQ= 2x73000x404 =1208 units-reorder point = d * l =...
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This note was uploaded on 07/17/2011 for the course ECONOMICS om112 taught by Professor Dr.natalo during the Spring '11 term at Bifröst Business.
- Spring '11