Question: ABC Inc. orders components for distribution at a monthly demand of 900 units. Holding costs are 15% of the unit cost of $23.75. The ordering

ABC Inc. orders components for distribution at a monthly demand of 900 units. Holding costs are 15% of the unit cost of $23.75. The ordering cost is $47.35. The company operates 240 days per year.

a. If the company wishes to effectively procure these components, what would be the optional amount to order?

b. What is the average inventory?

c. How many order cycles are there per year?

d. What are the total costs of managing the inventory?

e. What is the total cost, including the cost of the inventory?

f. What if ABC Inc. decided to order 600 components, what impact would it have on holding costs?

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