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The annual demand for a model airplane company is $89,535. The President of the company controls one of the largest toy companies in North Carolina. She estimates that the ordering cost is $41.67 per order. The carrying cost is $5.67 per unit per year. It takes 20 days from the time that the President places an order for model airplane kits until they are received at the warehouse. During this time, the daily demand is estimated to be 314 units.
Compute the EOQ, ROP, and optimal number of orders per year.
The President now believes that the carrying cost may be as high as 14% per unit per year. Furthermore, she estimates that the lead time may increase by 14%. Redo part (a), using these revised estimates.
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