|Question||The purchase price to RGK is $90 per battery. The clinic has an ordering cost of $35. Cost of carrying inventory is 35 percent of the item value per unit per year. Order lead time is constant at one month. The work year consists of 12 months.
a. Compute the economic order quantity for the RGK purchases.
b. Compute the reorder point and buffer stock level for a 99-percent customer service level. Assume order quantity and reorder point can be computed independently.
c. What is the total annual cost of carrying the buffer stock computed in part b?