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EOQ, reorder point, and safety stock Alexis Company uses 607 units of a product per year on a continuous basis. The product has a

 


EOQ, reorder point, and safety stock Alexis Company uses 607 units of a product per year on a continuous basis. The product has a fixed cost of $47 per order, and its carrying cost is $3 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. a. Calculate the EOQ. b. Determine the average level of inventory. (Note: Use a 365-day year to calculate daily usage.) c. Determine the reorder point. d. Indicate which of the following variables 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. a. Alexis' EOQ is units. (Round to the nearest whole number.)

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SOLUTION a To calculate the EOQ we can use the formula EOQ 2 Usage Carrying Cost Fixed Cost Days Usa... blur-text-image

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