Weekly demand (d) = 94 units
Annual demand (D) = d x number of weeks per year = 94 x 52 = 48888 units
Ordering cost (S) = $720 per order
Holding cost (H) = $23
Lead time (L) = 3 weeks
Standard deviation of weekly demand (sigmad) = 30 units
At 82% service level value of Z = 0.92
a) EOQ = Sqrt of (2DS / H)
= sqrt of [(2 x 4888 x 720) / 23)]
= 553.20 units
b) Safety stock = Z x sigma d x sqrt of L
= 0.92 x 30 x sqrt of 3
= 0.92 x 30 x 1.73
= 47.75 units
C) Reorder point = d x L + Safety stock
= 94 x 3 + 47.75
= 282 + 47.75
= 329.75 units
d) If the order quantity (Q) = 300 units
Annual Ordering cost = (D/Q) S = (4888/300)720 = $11731.2
Annual holding cost = (Q/2)H = (300/2)23 = $3450
Total annual cost = Ordering cost + Holding cost
= $11731.2 + $3450
= $15181.2