https://d2vlcm61l7u1fs.cloudfront.net/media%2F400%2F400466cb-1520-4efc-a463-3f8a6cb90796%2FphpRkV7Cd.png
Ordering Cost (S) = $35
Holding Cost (H) = h*i=90*35%=31.5
Unit price (h) = $90
EOQ= ?2DS/H=?(2*18000*35)/31.5
= 200 units.
https://d2vlcm61l7u1fs.cloudfront.net/media%2F5a9%2F5a9928ee-acf8-4d94-9325-261a01d7c193%2FphpnRMv8X.png
b- As per the figure b. The cumulative probability table with 99% customer service level monthly demand is 1900.
Hence Reorder Point= Monthly demand level*lead time= 1900*1=1900
Buffer stock level;= Reorder Point- Average monthly demand
=1900-1500
=400
C- The annual holding cost of buffer stock= Buffer stock level*Holding cost
=400*31.5
=$12600