Question
A retail store dealing in computer hardware imports an enterprise model solid-state drive (SSD) at a fixed price of $1,000 per unit from the sole
A retail store dealing in computer hardware imports an enterprise model solid-state drive (SSD) at a fixed price of $1,000 per unit from the sole distributer of the SSD. The estimated sales are 20,000 units per month, the ordering cost per order is 1000 $ and the average holding cost per unit per annum is estimated to be 12% per unit. Lead time is 5 days and the number of working days in the year is 250. a. Based on above information, compute i. Economic Order Quantity ii. Holding and Ordering costs iii. Re-order point b. The company decided to maintain a safety stock of 5000 units to avoid stockout. Taking the additional information into consideration, compute i. Economic Order Quantity ii. Holding and Ordering costs iii. RE-order point
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