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Ayo is the Purchasing Officer for a company that assembles desktop computers. The computers come with 4 to 6 USB ports. The annual demand for the computers is 600 units. The cost of each computer is $1700, and the inventory carrying cost is estimated to be 10% of the cost of each computer. Ayo has made a study of the costs involved in placing an order and has concluded that the average ordering cost is $50.00 per order. In addition, it takes 5 days for an order to arrive from the supplier.
Determine:
a. The Optimal Order Quantity
b. The reorder point
c. The Total Annual Inventory Cost
d. The optimal number of orders per year
e. The optimal number of days between orders, assuming there are 250 working days in the year.
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