For a item of recurring need, the demand per year is 87. The ordering cost is...

 

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For a item of recurring need, the demand per year is 87. The ordering cost is $90 per order and the holding cost rate is $300 per unit per year. The company uses a safety stock of 20 to protect against various risks. If they were able to reduce their safety stock to 12 units, how much would this yield in annual savings in inventory costs? What is the EOQ for this item? How many times a year would they place an order, on average? What is the annual total cost with safety stock at the current level of 20? For a item of recurring need, the demand per year is 87. The ordering cost is $90 per order and the holding cost rate is $300 per unit per year. The company uses a safety stock of 20 to protect against various risks. If they were able to reduce their safety stock to 12 units, how much would this yield in annual savings in inventory costs? What is the EOQ for this item? How many times a year would they place an order, on average? What is the annual total cost with safety stock at the current level of 20?

Answer rating: 100% (QA)

SOLUTION To calculate the annual savings in inventory costs by reducing the safety stock from 20 uni... View the full answer