DEF Company is a wholesaler of childrens toys. Backorder is possible for the toy car. The annual demand of the toy car is 20.000 pieces, the holding cost is 2 $ / unit and the ordering cost is 15$ . Backorder cost is 10$ per unit. There are 200 working days in a year and lead time is 3 days. According to these information,

a) What is the optimal highest positive stock level for the toy car?

b) What is the optimal highest negative stock level? and the optimal proportion of time that the inventory should be negative?

c) What is the optimal order quantity and the optimal proportion of time that the inventory should be positive?

d) What is the time between the two orders (stock cycle), the reorder point and reorder point time and total cost?

e) If the company does not allow backorders, what would be the optimal order quantity and the change in total cost?

Answer rating: 100% (QA)

a The optimal highest positive stock level is 10000 pieces The optimal highest positive stock level is 10000 pieces This is because the holding cost is 2 unit and the ordering cost is 15 Backorder cos... View the full answer