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A oompany sells Eflflflfl litres of a commodity per year. Cost of the commodity is 51:1] per litre.
Inventory carrying costs are 15% of the commodity cost. The cost of ordering is 5?: per order. Order
lead time ayerages five days and average daily demand is zoo litres per business day. Management
wants a safety stock of ten days. Required:
[3] Calculate the £0.01, for the commodity. [ls] Determine how many orders should be placed each yea r. [c] Find the re-order point.

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