Find the optimal lot size and reorder point

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An item in inventory has a constant demand of 2500 units per year. It costs $ 500 to place an order and the unit cost of the item is $ 30.00, when ordered from 0 to 499 pieces, $ 25.00 if ordered between 500 and 899, and $ 22.00 when more than 899 pieces are ordered. The cost of maintaining the inventory is 20% annually, and since the supplying plant is located in the same industrial park, the items are received at a rate of 40 units per day to complete the order, the suppliers work 260 days year. There is an intermediate period of two months from the batch of items is ordered until the completed units begin to arrive at the plant. Find the optimal lot size and reorder point. Assume that are not permitted missing.

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Reference no: EM131041695

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