Annual total ordering cost and annual total holding cost

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Reference no: EM13962220

Consider a product satisfying the EOQ assumptions. The demand is 12000 units /year, and we do not consider any randomness in the demand here. Purchase price is $50 /unit. Ordering cost is $180 per order, and holding cost is $12.0 /unit/year.

a) To minimize the annual inventory cost, how many units should you order each time? Round up your answer to the nearest integer if needed.

b) What is the annual total ordering cost and annual total holding cost?

c) What is the annual total cost (AIC+total purchasing cost) using the ordering quantity you found in (a)?

d) Assume a year has 50 weeks and the lead time is 2 weeks, what is the reorder point (ROP)?

e) The vendor is willing to give you a 3% discount if you order at least 3000 units each time. Keep everything else the same. Would you take this discount if you want to minimize the annual total cost?

Reference no: EM13962220

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