Question: TechGear Inc. sells 2 4 , 0 0 0 units of a product annually. There are 3 0 0 business days in a year and
TechGear Inc. sells units of a product annually. There are business days in a year and all calculations that follow are based on these business days a year, not days. The company purchases the product at a cost of $ per unit from a vendor located approximately miles away. When a purchasing order is placed, the company incurs a fixed ordering cost of $ and it takes days for the product to arrive ie lead time or reorder period Additionally, there is a holding cost of $ per inventory unit per year.
The management has been using an ROP of To achieve a service level of or better, the management calculated the minimum safety stock SS needed such SS if it is not needed With this SS there may be an impact on the inventory costs for the year due to the above safety stock. Is this possible impact an increase or decrease in the inventory costs of the year? What is the most possible amount of this impact in $
Boxes sold Units sold Frequency observations
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