Question
Alexis Company uses 800 units of a product per year on a continuous basis. The product has a fixed cost of $50 per order, and
Alexis Company uses 800 units of a product per year on a continuous basis. The product has a fixed cost of $50 per order, and its carrying cost is $2 per unit per year. It takes 5 days to receive a shipment after an order is placed. And the firm wishes to hold 10 days usage in inventory as a safety stock Calculate the EOQ Determine the average level of inventory. (Note: Use a 365 day year to calculate daily usage) Determine the reorder point Indicate which of the following variable change if the firm does not hold the safety stock: (1) order cost, (2) carrying cost, (3) total inventory cost (4) reorder point (5) economic order quantity. Explain.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started