The following information has been gathered by Miller Company to determine its economic order quantity.
Annual demand ...................................................................... 2,000,000
Cost to place an order ............................................................ $ 9.50
Cost to carry a unit in inventory ............................................ 2.75
Required
Use a computer spreadsheet to answer the following questions. Treat each situation independently. Do not round your answers to the nearest whole unit.
A. What is the economic order quantity?
B. If demand increases by 25 percent, what is the economic order quantity?
C. If the cost to place an order increases by $ 2.00, what is the economic order quantity?
D. If the cost to carry a unit in inventory increases by $ 0.50, what is the economic order quantity?
E. If Miller decides to maintain a safety stock of 200 units, what is the economic order quantity?