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Diano4ka-milaya
2 months ago
10

Rick Jerz is attempting to perform an inventory analysis on one of his most popular products. Annual demand for this product is

5,000 units; carrying cost is $50 per unit per year; order costs for his company typically run nearly $30 per order; and lead time averages 10 days. (Assume 250 working days per year.) a) The economic order quantity is 77.46 units (round your response to the nearest whole number). b) The average inventory is 38.73 units (round your response to the nearest whole number). c) The optimal number of orders per year is 64.55 orders (round your response to the nearest whole number). d) The optimal number of working days between orders is 3.87 days (round your response to two decimal places). e) The total annual inventory cost (carrying cost + ordering cost) is $ (round your response to two decimal places).f. The re-order point in _ units?
Business
1 answer:
harina [3.8K]2 months ago
7 0

Answer:

(e) $3,873

(f) 200 units

Explanation:

(e)

Total carrying expenses:

= Average Inventory × carrying cost per unit

= 38.73 × 50

= $1,936.5  

Annual order costs:

= Optimal number of orders each year × Cost per order

= 64.55 × 30

= $1,936.5

<pthus the="" overall="" expense="" is="" total="" of="" annual="" ordering="" and="" holding="" costs.="">

Therefore,

Total Cost:

= Annual Ordering Cost + Annual Holding cost

= ($1,936.5 + $1,936.5)

= $3,873

Consequently, the yearly total inventory cost amounts to $3,873.

(f) Reorder Point:

= Average Daily Sales × Delivery lead time

= (Annual demand ÷ Working days per year) × Delivery lead time

= (5,000 ÷ 250) × 10

= 200 Units

Thus, the reorder threshold is set at 200 units.

</pthus>
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