1. A company uses 5000 units of an item in a year. It costs the company $35 to p
ID: 360658 • Letter: 1
Question
1. A company uses 5000 units of an item in a year. It costs the company $35 to place an order for this item, and it costs $24 to hold one unit of this item in inventory for one year. If the company uses an order quantity of 500 what would be its total cost for inventory?
$59
2. Average demand for a particular item is 1,200 units per year. It costs $100 to place an order for this item, and it costs $24 to hold one unit of this item in inventory for one year. If the EOQ model is used, how many orders will be placed a year?
8
3. Average demand for an item is 75 per week with a standard deviation of 16. The lead time to get an order is 1.5 weeks. If the manager of this item wants a 90% Customer Service Level how much safety stock should she carry? (round your final answer to the nearest whole number.
$5000Explanation / Answer
Total Inventory cost formula= c(q/2)+ F(D/Q)
D (Units Demand per Year)= 5000
F (Fixed Cost Per Order)= 35
Q (Order Quantity)= 500
C (Cost/Unit/Year= 24
Hence keeping the value in formula Totalk inventory cost = $6350
Hence Option C is correct
2- Option D is correct. 12 orders.
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