Safety Firms Inc. sells photographic products using an (RS) type of control syst

    Safety Firms Inc. sells photographic products using an (RS) type of control system. SFI is considering investing in a scanner such that they can move from an (RS) type to an (RQ) inventory policy. It is expected that with a continuous review policy the firm could reduce inventory management costs significantly: holding and shortage costs could be reduced. The unit cost of products is $10. Shipping and handling cost is $5. Demand for this year is estimated at 1200 units. The inventory carrying cost is 0.12 $/$/year. Please use optimal (RQ) policy assuming a lead time L=10 days standard deviation of lead time = 35 units to find the following: a) EOQ 1. If a flat charge of $23.85 per stockout occasion (B1) is used please find b) Safety stock (ss) c) reorder point d) Purchasing cost e) Holding cost f) Shortage cost and total cost Repeat the process using the following options. 2. B2 = 25% of unit cost will be charged per unit short 3. B3 = 10% of unit cost will be charged per unit short per month

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