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1. Lighthouse Electric Company (LEC) is a distributor of small to medium size electrical transformers. The LEC warehouse contains 3,000 ft of usable floor space. LEC carries four different transformers in inventory. All other demand is special ordered from the manufacturer and shipped direct to the customer. The following data is relevant. TRANSFORMER NUMBER Demand per year 2,000 Ordering cost $12.00 Cost per unit $20.00 Floor space required The annual inventory carrying cost rate is 0.20. 10,000 $20.00 $6.00 2.Oft 20,000 $20.00 $10.00 2.0ft? 16,000 $16.00 $ 4.00 3.0ft? a. What is the optimal inventory policy if floor space is dedicated to each product based on the maximum inventory for that product? b. What is the policy if floor space is dynamically allocated assuming the average inventory level for each product? c. What is the cost/year to LEC of limited (3,000 ft) floor space under both assumptions? 1. Lighthouse Electric Company (LEC) is a distributor of small to medium size electrical transformers. The LEC warehouse contains 3,000 ft of usable floor space. LEC carries four different transformers in inventory. All other demand is special ordered from the manufacturer and shipped direct to the customer. The following data is relevant. TRANSFORMER NUMBER Demand per year 2,000 Ordering cost $12.00 Cost per unit $20.00 Floor space required The annual inventory carrying cost rate is 0.20. 10,000 $20.00 $6.00 2.Oft 20,000 $20.00 $10.00 2.0ft? 16,000 $16.00 $ 4.00 3.0ft? a. What is the optimal inventory policy if floor space is dedicated to each product based on the maximum inventory for that product? b. What is the policy if floor space is dynamically allocated assuming the average inventory level for each product? c. What is the cost/year to LEC of limited (3,000 ft) floor space under both assumptions

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