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Compute reorder point or reorder level

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Reference no: EM133055820

Ywe limited assembles welding machines. It purchases various parts from different suppliers. One such part is Part 03X whose details are provided below.
 
Monthly demand for the part         375,000 units
Holding cost per unit                     1% of parts value
Order cost per order                       Sh 600
Purchase price                               Sh 150 per part
Lead time                                         2 days
Annual working days                     300 days

Required

-Compute economic order quantity (EOQ) and total holding costs

-Compute reorder point or reorder level

-The part supplier proposes to offer 0.5% discounts if orders of 75,000 units to 99,000 units are made and 0.75% if order above or 100,000 or more are place. Advice management whether it should accept offers

-Due to ongoing closure of many business, the firm has decided to maintain a safety stock of 20,000 units. Does this decision have effect on EOQ quantity, re-order point and inventory costs? If it does, explain the effect (support your answer through computation)

Reference no: EM133055820

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