Thomas Kratzer is the purchasing manager for the headquarters of a large insurance company chain with a central inventory operation.

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Thomas

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s fastest

$-$

moving inventory item has a demand of

$6$

$1$

$0$

$0$

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units per year. The cost of each unit is

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$

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$1$

$0$

$2$

$,$

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and the inventory carrying cost is

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$

$1$

$1$

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per unit per year. The average ordering cost is

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$

$2$

$9$

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per order. It takes about

$5$

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days for an order to

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arrive

$,$

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and the demand for

$1$

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week is

$1$

$2$

$2$

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units

$.$

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$($

This is a corporate

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operation

$,$

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and there are

$2$

$5$

$0$

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$$

working days per

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year

$)$

eoq

$=$

$$

$1$

$7$

$9$

$.$

$3$

$4$

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What is the average inventory if the EOQ is

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$$

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used

$?$

$$what is the optimal number of days between any two orders