Phillip Flamm’s Computer Store in Texas sells a printer for $200. Demand is constant during the year, and annual demand is forecasted to be 600 units. Holding cost is $20 per unit per year, whereas the cost of ordering is $60 per order. Currently, the company is ordering 12 times per year (50 units each time). There are 250 working days per year, and the lead time is 10 days.
a) Given the current policy of ordering 50 units at a time, what is the total of the annual ordering cost and the annual holding cost?
b) If the company used the absolute best inventory policy, what would be the total of ordering and holding costs?
c) What is the reorder point?