The retail company XYZ sells 4,000 widgets per month. The company is going through a period of tight finances and any money available can be invested in its business to obtain a 23.2% return per annum. The company operates a warehouse for storing its materials and there is ample empty space in the warehouse. Taxes, insurance, and other variable costs of operating the warehouse average 6.8% of the value of materials stored in the warehouse. Vendor A offers a unit price of $11.25 per widget and has a leadtime (i.e., production+delivery time) of 4 days. The cost of ordering from A is estimated to be $22 per order. Assume in parts (a) and (b) that the demand and leadtime are deterministic. a) (8 points) Determine the optimal quantity to order as well as the reorder level. Find the Total Annual Inventory Holding and Ordering Costs, and the Total Annual Cost if XYZ used vendor A

Answer rating: 100% (QA)

To determine the optimal quantity to order and the reorder level from vendor A we can use the Econom... View the full answer