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A firm expects to sell 10,000 units of its product annually. It estimates that it costs $200 to place an order and that each unit costs $7 annually to carry in inventory. It takes 7 days to receive an order once it is placed, and the store is open 365 days per year.
a) How many units should the firm order at a time if it wants to minimize the sum of ordering and carrying costs?
b) How many orders will it place in a year?
c) What will its average inventory level be during the year?
d) What is its reorder pointA firm expects to sell 10,000 units of its product annually. It estimates that it costs $200 to place an order and that each unit costs $7 annually to carry in inventory. It takes 7 days to receive an order once it is placed, and the store is open 365 days per year.
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