Reference no: EM132685470

Question - Expected annual usage of a raw material is 80,000 units. The invoice cost is $50 per unit. It cost $1.00 to carry a unit inventory and the cost of placing an order is $50.00. The company's average working day in a year is 300 days. The average delivery period is 7 days. Company's policy is to have at least 1,800 units buffer stock.

Required - Determine the following:

1. Economic Order Quantity

2. Average Inventory

3. Number of Orders

4. Total Ordering Costs

5. Carrying Cost per Unit

6. Total Carrying Cost

7. Total Ordering and Carrying Cost

8. Safety Stock

9. Reorder Point (with safety stock)

10. Reorder Point (w/o safety stock)