Widget Co. has the following data available relative to its investment in materials:

Number of units of material used annually 20,000

Number of workdays in a year 250

Cost of placing an order $20

Annual carrying cost per unit of inventory $5

Requirements:

1. Compute the economic order quantity (please show your work).

2. Give some examples of order costs and carrying costs.

Order costs:

Carrying costs:

3. Using the above data, compute the order size that results in the minimum total order and carrying cost by completing the following table.

Order Size Number of Orders Total Order Cost Average Inventory Total Carrying Cost Total Order and Carrying Costs

100

200

300

400

500

600

700

800

4. If the company requires a safety stock of 200 units and has an anticipated lead time of 5 days, what is the order point (please show your work)?