Fine Dining sells high-end stemware. During a year, Fine Dining sells 1,500 cases of stemware with average sales of 5 cases per day. The cases of stemware cost $245 each. Because the stemware is fragile and requires special handling, the carrying costs are $50 per case. The ordering costs are $15 per order. Currently, Fine Dining is placing orders every week (5 days lead time) for 25 cases. Although this usually met demand, Fine Dining has faced stock-outs and has had to disappoint customers. In reviewing historical sales records, managers learn that the maximum sales quantity is 7 cases per day.

Required:

A. Calculate the total ordering cost and carrying cost for the current order size.

B. Calculate the economic order quantity. Comment on how this order quantity will help impact Fine Dining’s inventory handling concerns.

C. Calculate the appropriate re-order point, taking into account the occasional stock-out problems. Discuss any potential problems with the timing of this re-order point.