quot;1. Allen’s Shoe Stores carries a basic black dress whoe for men that sells at an approximate constant rate of 500 pairs of shoes every three…

“1. Allen’s Shoe Stores carries a basic black dress whoe for men that sells at an approximate constant rate of 500 pairs of shoes every three months. Allen’s current buying policy is to order 500 pairs each time an order is placed. It costs $30 to place an order, and inventory-carrying costs have an annual rate of 20 percent. With the order quantity of 500, Allen’s obtains the shoes at the lowest possible unit cost of $28 per pair. Other quantity discounts offered by the manufacturer are listed below:Order Quantity Price Per Pair0-99 $36100-199 $32200-299 $30300 or more $28What is the minimum-cost order quantity for the shoes? What are the annual savings of your inventory policy over the policy currently being used?2. Brauch’s Pharmacy has an expected annual demand for a leading pain reliever of 800 boxes, which sell for $6.50 each. Each order costs $6.00, and the inventory-carrying charge is 20 cents. The expected demand during the lead time is normal, with a mean of 25 and a standard deviation of 3. Assuming 52 weeks per year, what reorder point provides a 95 percent service level? How much safety stock will be carried? If the carrying charge were 25 cents instead, what would be the total annual inventory related cost? ”

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