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 24,000 units of a product annually. There are 300 business days in a year and all calculations that follow are based on these business days a year, not 365 days. The company purchases the product at a cost of $40 per unit from a vendor located approximately 90 miles away. When a purchasing order is placed, the company incurs a fixed ordering cost of $600, and it takes 3 days for the product to arrive (i.e., lead time or reorder period). Additionally, there is a holding cost of $20 per inventory unit per year.
The management has been using an ROP of 240. To achieve a service level of 90% or better, the management calculated the minimum safety stock (SS) needed (such SS =0 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)
2121020
2222030
2323045
24240105
2525030
2626020

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