Question: A. Bailey, LLC expects demand for its products to be 400,000 units this coming quarter. Bailey pays an average of $75 to place orders and

A. Bailey, LLC expects demand for its products to be 400,000 units this coming quarter. Bailey pays an average of $75 to place orders and holding costs for Baileys inventory are $10/unit. How much should Bailey order in inventory when making an order?

B. Bailey (see A) takes 45 days to produce raw goods into finished goods. Raw goods take 4 days to ship to Bailey. What is Baileys reorder point? How would this change if Bailey wanted a buffer stock of $50,000 inventory?

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