I don’t know if the numbers are supposed to be together or not but if it’s 752,863 than the expanded notation is:
700,000
+ 50,000
+ 2,000
+ 800
+ 50
+ 3
And if it is 752; 863 than the expanded notation is:
700
+ 50
+ 2
;
800
+ 60
+ 3
Answer:
a) safety stock = z-score x √lead time x standard deviation of demand
z-score for 99.9% = 3.29053
√lead time = √7 = 2.6458
standard deviation of demand = 3
safety stock = 3.29053 x 2.6458 x 3 = 26.12 ≈ 26 soaps
reorder point = lead time demand + safety stock = (7 x 16) + 26 = 138 soaps
EOQ = √[(2 x S x D) / H]
S = order cost = $10
D = annual demand = 16 x 365 = 5,840
H = $0.05
EOQ = √[(2 x $10 x 5,840) / $0.05] = 1,528.40 ≈ 1,528 soaps
b) total order costs per year = (5,840 / 1,528) x $10 = $38.22
total holding costs = (1,528 / 2) x $0.05 = $38.20
total annual ordering and holding costs = $76.42
I disagree because you should never change the truth just a little because if you do your lying to yourself and everybody else.
