Question

Stephanie Robbins is attempting to perform an inventory analysis on one of her most popular products Annual demand for this product is 5.000 units carrying costs $50 per unit per year, order costs for her company typically run nearly $30 per order and load time averages 10 days. Assume 250 working days per year.) a) The economic order quality is units fround your response to the nearest whole number). b) The average Inventory is units (round your response to the nearest whole number) c) The optimal number of orders per year isorders fround your response to the nearest whole number) d) The optimal number of working days between orders is days (round your response to modello .) The towaru inventory cost carrying out ordering cost) i fround your r e to no decimal The reorder point is units enter your response as a whole number

Answer 1

a) Economic order quantity = sqrt((2*5000*30)/50) = 77.45966692 = 77 (Rounded to nearest whole number)
b) Average inventory = EOQ/2 = 77.45966692/2 = 38.72983346 = 39 (Rounded to nearest whole number)
c) The optimal number of orders per year = 5000/77.45966692 = 64.54972244 = 65 (Rounded to nearest whole number)
d) optimal number of working days betwene orders = number of days available/optimal number of orders per year = 250/64.54972244 = 3.872983346= 3.87 days (Rounded to two decimal places)
e)Annual inventory cost = (5000/77.45966692)*30+(77.45966692/2)*50 = 3872.983346 = 3872.98 (Rounded to two decimal places)
f)The reorder point is = lead time demand = (5000/250)*10 = 200 units