How many chairs should the firm order each time

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Reference no: EM132084327

Ergonomics Inc. sells ergonomically designed office chairs. The company has the following information:

average demand= 20 units per day

average lead time= 30 days

Item unit cost= $50 for orders of less than 200 units

Item unit cost= $48 for orders of 200 units or more

Ordering cost= $25

Inventory carrying cost= 25%

The business year is 250 days

How many chairs should the firm order each time? Assume there is no uncertainty at all about the demand or the lead time. There are many associated questions, such as what will the firm's average inventory be under each alternative? What will be the breakdown of costs for each alternative?

Reference no: EM132084327

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