Question: Best Byte , a major online consumer electronics retailer with a central depot in Surrey, BC, purchases a steady-selling video-casting device called Chromescreen from the

Best Byte, a major online consumer electronics retailer with a central depot in Surrey, BC, purchases a steady-selling video-casting device called Chromescreen from the manufacturer at $40/unit. The weekly demand for Chromescreen is steady at 60 units. The fixed ordering cost for Chromescreen is $100 per order and the annual holding cost rate is 25% of the unit purchasing cost. Assume 52 weeks/year.

A. Currently, Best Byte is implementing an EOQ policy for Chromsecreen. Determine the order quantity and the total annual inventory-related cost (TC).

Order quantity:

TC:

B. Suppose, Best Byte has developed an IT system, which simplified its order fulfillment process and lowered its fixed ordering cost by 50%. Select the impact of this change on the following measures for Chromescreen. No explanations needed. Assume other parameters remain the same.

EOQ: increase decrease no changes

Number of orders/yr: increase decrease no changes

Total inventory-related cost: increase decrease no changes

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