Compute economic order quantity-number of orders per year

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Reference no: EM13957539

Component SM-782 has an annual demand of 3500. The ordering cost is $200 per order, and lead time is 7 days. Inventory holding cost is $140 per unit per year. Assuming 350 working days per year, compute the following:

a. Economic order quantity

b. Number of orders per year

c. Cycle length (i.e., number of days between consecutive orders)

d. Maximum inventory level

e. Average inventory level

f. Annual ordering cost

g. Annual inventory holding cost

h. Total annual cost

i. Reorder point

Suppose the company currently has a policy of ordering 350 units at a time.

j. How much money are they losing every year as a result of this policy?

Reference no: EM13957539

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