Generators R Us (GRU) is a leading manufacturer of partible electric generators used for emergency power supply in both civil and private disaster situations. Each year it produces 16,000 of its model HI-360 units. This model used two bearings, which the company purchases from an outside vendor. A review of accounting and usage records reveals the following information:

labour for installing the bearings = $8 per generator;

• per-unit cost of bearings = $25;

• delivery charges per order = $5;

• processing costs per order = $6;

• mailing expenses per order = $2; and

• the estimated cost of carrying one bearing in inventory for the ear = $0.35.

GRU also found that on average four days elapse between the time an order is placed and the time items are received. 

Required: 

a) Compute the economic order quantity. 

b) Compute the reorder point. Assume that the HI-360 model is manufactured for 350 days each year

Answer rating: 100% (QA)

Generators R Us Economic Order Quantity and Reorder Point a Economic Order Quantity EOQ Demand D 160... View the full answer