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How often should fancy-bike order the inventory of bicycle

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Fancy-Bike Manufacturing needs 500,000 units of bicycle tires for its production of beach bikes per year. The carrying costs of these tires are $8 per unit per year and the fixed ordering cost is $500.

Problem a. What is the optimal number of units Fancy-Bike should order each time in order to minimize total inventory cost?

Problem b. How often (approximately every how many days) should Fancy-Bike order the inventory of bicycle tires? Assume a 365-day year.

Problem c. What is the annual carrying/holding cost at this optimal order quantity?

Reference no: EM132962596

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