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How much is the annual cost of inventory

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Reference no: EM132935024

Question - Scouts Corp. projects its sales to be 1,000 units this year. As a result of holding inventories, insurance, storage, taxes and other cost are incurred amounted to P2 per unit per year. Every time Scouts Corp. makes an order, P10 is incurred. On the average it takes 3 days to make and receive an order. (Use 360 days a year).

1. How much transaction or ordering cost are incurred each year?

2. How much is the annual cost of inventory?

3. What is the reorder point?

Assuming Scouts Corp.'s inventory may take as 5 days to respond:

4. How much safety stock should the company keep?

5. How many units of inventory is the average daily usage?

6. What is the normal lead time usage?

7. What is the reorder point?

Reference no: EM132935024

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