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?EOQ, reorder? point, and safety stock
Alexis Company uses 783 units of a product per year on a continuous basis. The product has a fixed cost of $42 per? order, and its carrying cost is $4 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.
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