Question: Novelty Gifts, Inc. is experiencing some inventory control problems. The manager, Wanda LaRue, currently orders 5,000 units four times each year to handle annual demand

 Novelty Gifts, Inc. is experiencing some inventory control problems. The manager,

Novelty Gifts, Inc. is experiencing some inventory control problems. The manager, Wanda LaRue, currently orders 5,000 units four times each year to handle annual demand of 20,000 units. Each order costs $15 and each unit costs $1.50 to carry. Ms. LaRue maintains a safety stock of 200 units. Required (show all of your calculations) 1. Calculate Novelty Gifts' current total annual inventory cost before they begin using EOQ. 2. Calculate the economic ordering quantity (EOQ). 3. Calculate average inventory under EOQ if Ms. LaRue maintains a safety stock of 200 units? 4. Calculate total annual inventory cost under EO

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!