Determine the average level of inventory

Reference no: EM131932912

Question: Alexis Company uses 748 units of a product per year on a continuous basis. The product has a fixed cost of 57$ per order and a carrying cost of 3$ per unit per year. It takes 5 days to receive a shipment after an order is placed, and the firm wishes to hold 10 days' usage in inventory as a safety stock

a. Calculate the EOQ.

b. Determine the average level of inventory. (Note:Use a 365-day year to calculate daily usage.)

c. Determine the reorder point.

d. Indicate which of the following variables change if the firm does not hold the safety stock:

(1) order cost,

(2) carrying cost,

(3) total inventory cost,

(4) reorder point,

(5) economic order quantity. (multiple answer)

Reference no: EM131932912

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