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Determine the average level of inventory

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Reference no: EM133150971

Question - Alexis Company uses 800 units of a product per year on a continuous basis. The product has a fixed cost of $50 per order, and its carrying cost is $2 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. Assume EOQ will be ordered.

1. Calculate the EOQ and safety inventory.

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

3. Determine the reorder point.

4. Determine total inventory cost.

5. Determine the optimal length of one inventory cycle, assuming EOQ is ordered.

Reference no: EM133150971

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