Question 6

6. (12 marks) A retail store purchases certain household equipment from a supplier and resells them for a prot. Based on past sales record, they can sell the equipment fairly evenly throughout the year. The store is open 300 days every year. The total cost to handle each purchase order is about $50, and the inventory cost for each unit is $2.4 yearly, which is 20% of the purchase cost. It takes about 6 working days for each order to be delivered to the store. (a) If the EOQ is 850 units, determine the average monthly demand. (b) Find the total ordering cost per year at the EOQ. (c) Find the inventory size at which the store should reorder. (d) How often (in days) should the orders be placed? (e) Produce a graph detailing the inventory change in time and reordering point. (1) Suppose it is known at the beginning of an inventory cycle that the delivery of the order will be delayed. Up to how many days the delay can be before shortage occurs