The Jubail Bicycle Shop operates 7 days per week, closing 5 dayseach for Eid-ul-Fitr and Eid- Ul -Adah (this gives 355 working daysin a year). The shop pays SAR 600 for a particular bicyclepurchased from the manufacturer. The annual holding cost perbicycle is estimated to be 25% of the SAR value of inventory. Theshop sells an average of 25 bikes per week. Frequently, the dealerdoes not have a bike in stock when a customer purchases it, and thebike is back ordered. The dealer estimates his shortage cost perunit back-ordered, on an annual basis, to be SAR 400 due to lostfuture sales (and profits) and the lead time is 2 weeks. Theordering cost for each order is SAR 300. Determine thefollowing
a. Optimal order quantity
b.Shortage level (Maximum number of back orders)
c. Total minimum cost.
d. Optimal ordering policy
e. How long will there be stock out?
