Alice opens an aquarium store in a lively shopping mall and finds business to be booming but she often stocks out of key items customers want. She decides to experiment with inventory-control methods such as using a fixed-order quantity (FQS) and/or fixed-order period (FPS) systems. The FLUVAL 303 Pump, a high margin and profitable pump, is one of her best sellers but it stocks out frequently. You collect the following data with respect to this pump’s sales.

Demand = 5 units per week	Store open 50 weeks/year
Order cost = $40/order	Lead-time = 3 weeks
Item cost = $80/pump
Inventory holding cost = 15% per year

1. What is inventory-carrying (holding) cost per pump per year?

Answer choices: 10, 12, 16, or 18

2. What is the economic order quantity?

Answer choices: 38, 39, 41, or 43
3. What is the average number of orders per year if using the EOQ?6. What is the economic order quantity?

Answer choices: 5.8, 6, 6.1, or 6.3

4. What should be the reorder point to achieve the desired service level of 96 percent?

Answer choices: 25.8, 26.9, 30.8, or 33.2

Answer rating: 100% (QA)

Part 1 Inventory holding ... View the full answer