Amdany Ltd. uses a part branded Maxi whose demand tends to be constant at an annual rate
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Question:
Amdany Ltd. uses a part branded "Maxi" whose demand tends to be constant at an annual rate of 4.4 million units. The cost per unit for this part is $.220 and the cost of placing an order is $.550.
Amdany Ltd. estimates that the annual inventory carrying cost of the part expressed as a percentage of cost of average inventory is 20%.
i) Compute the economic order quantity (EOQ).
ii) Compute the annual number of orders.
iii) Calculate the reorder point. Assume that lead time is 11 days and the company works for 330days in a year.
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