Determine the most cost-effective ordering quantity

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Reference no: EM132153823

For product M, a firm has an annual holding cost that is 25% of the item cost, an ordering cost of $10 per order, and annual demand of 1560 units. If ordering at least 85 units, the price per unit is $16; if ordering at least 95 units, the price per unit is $14.5. Lead time is 5 days. The firm operates 260 days.

a) Determine the most cost-effective ordering quantity

b) What is the total cost for the order quantity determined in a).

c) Calculate reorder point

Summarize the inventory policy based on your calculation results.

Reference no: EM132153823

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