Kiko Ltd. is a large cash and carry warehouses which sells electronics. Kiko Ltd. Purchases the most popular model of calculators (FX 100) directly…

Each time the warehouses runs out of stock, an emergency order is placed with an extra cost of Sh.20 per calculator.

Required:

The economic order quantity (EOQ) and the reorder level.                 (16 marks)

The total annual relevant costs for the order quantity in (a) above.    (4 marks

a) D = 475Co = Sh.50Ch = Sh.12.50 + 10% (250) = Sh.37.50Lead time 0 1 2 3 4 5 6 7 8 demandProbability 0.0 0.0 0.1 0.1 0.20 0.1 0.1 0.10 0.04 2 4 2 6 6 6 EOQ 2 X 475 X 5037.50 35.59 units 36…