Our materials department stocks an item which on average is required every three days. The cost of the item is $500 and the ordering cost is $50. Storage of the items costs about $200 per year each.

a) How often should we reorder the item?

b) If we reduce the storage cost by , how much will we save per year?

Our materials department stocks an item which on average is required every three days. The cost of the item is $500 and the ordering cost is $50. Storage of the items costs about $200 per year each.

a) How often should we reorder the item?

b) If we reduce the storage cost by , how much will we save per year?