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) What is the economic order quantity?
b) What is the average inventory?
c) What is the optimal number of orders per year?
d) What is the optimal number of working days between orders?
e) What is the total annual inventory cost (carrying cost + ordering cost)?
f) What is the reorder point?