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Question - Meriah Plastics Sdn Bhd annual sales are 42,000 units. The cost of placing an order is RM54 per order and it estimates that 14 days are needed to receive an order once placed. Meriah Plastics Sdn Bhd offers at lowest price, which is RM6.50 per unit. The firm's carrying costs associated with this item are RM0.30 per unit per month. The order should be placed in multiple of 10 units. Meriah Plastics Sdn Bhd decided to maintain a safety stock of the item equal to five days of usage. (Assume a 365-day year).
Required -
a) Calculate the firm's economic order quantity (EOQ) for the item of inventory.
b) Determine the firm's total cost based upon the calculated EOQ.
c) Calculate the approximate level of safety stock should the firm hold.
d) Determine the firm's reorder point for the item of inventory being evaluated.
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