Ace Generator Company purchases a component used in the manufacture of automobile generators directly from the supplier.Ace's generator production operation, which is operated a constant rate, will require 13,000 components per year.

Assume that the ordering costs are $1600 per order, the unit cost is $116.30 per component, and the annual holding costs are 12% of the value of the inventory.Ace Generator Company has 290 working days per year and a lead time of 6 days.Devise an inventory policy for Ace Generator Company to include:

Economic Order Quantity

Annual Holding Costs

Annual Ordering Costs

Total Annual Costs

Maximum Inventory Level = EOQ

Average Inventory Level = EOQ

2

Reorder Point

Number of Orders per year

Cycle Time (Days)

.