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Determine the average level of inventory

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Your manufacturing concern requires 950 units of a product per year on a consistent basis. The fixed cost per unit is $61 per order, while carrying cost is $3 per unit per year. Allow 7 days for shipping after placing an order. Safety stock requires holding 10 days' usage in inventory.

(A) Determine the EOQ.

(B) Assuming a 365-day year, determine the average level of inventory.

(C) Calculate the reorder point.

(D) If the firm does not hold the safety stock, which of these variable would change, and why: (i) order cost, (ii) carrying cost, (iii) total inventory cost, (iv) reorder point, (v) economic order quantity.

Reference no: EM132685575

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