The total product curve: a. will become flatter as output increases if there are diminishing returns to the variable input. b. w
1 answer:
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Answer:
a. The answer is:762 bottlé.
b. The answer is: 487 bottles.
Explanation:
a. The economic order quantity is calculated as: =
= 762 units because: D = annual demand = Weekly demand x week opening per year = 134 x 52 = 6968; S = Cost per order = 25; H = Holding cost per unit = 15% x purchase price = 15% x 4 = 0.6
b. Inventory level to place order:
With the inventory system providing a 95 percent service probability, z level is 1.64 (using the NORM.S.INV function in excel).
So Inventory level to place order = 134 * 3 + 1.64 * 30 * 3^0.5= 487 bottles.