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Determine the total annual ordering cost

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Reference no: EM132720929

Fixed - Time period Modeldemand is 10 units. The firm reviews its inventory every 28 days. Each order for the weekly demand for a product is 770 units. The standard deviation of daily product arrives 9 days after placement. At the time of review, there are 10 units backorder. If 95 percent of all demand is to be satisfied from items in stock:

a) How many units should be the safety stock?

b) What's the product's inventory status?

c) How many units should be ordered for this period?

Solve the following EOQ model problems:

Each year, Y Company purchases 20,000 units of an item that costs P 640 per unit. The cost of placing an order is P 480, and the cost to hold the item in inventory for one year is P 150.

a. Determine the EOQ.

b. What is the average inventory level, assuming that the minimum inventory level is zero?

c. Determine the total annual ordering cost and the total annual holding cost for the item if the EOQ is used.

Reference no: EM132720929

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