RGK, Inc. manufactures smart cell phones. RGK has recently introduced a new line of smart phones that

Question:

RGK, Inc. manufactures smart cell phones. RGK has recently introduced a new line of smart phones that is popular for college students. RGK purchases batteries from an outside supplier. RGK has noted the following demand for its new phones.

The purchase price to RGK is $90 per battery. The clinic has an ordering cost of $35. Cost of carrying inventory is 35 percent of the item value per unit per year. Order lead time is constant at one month. The work year consists of 12 months.
a. Compute the economic order quantity for the RGK purchases.
b. Compute the reorder point and buffer stock level for a 99-percent customer service level. Assume order quantity and reorder point can be computed independently.
c. What is the total annual cost of carrying the buffer stock computed in part b?

Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most... Economic Order Quantity
Economic order quantity (EOQ) is the ideal order quantity a company should purchase to minimize inventory costs such as holding costs, shortage costs, and order costs. This production-scheduling model was developed in 1913 by Ford W. Harris and has...