Minimum total annual ordering and inventory carrying cost

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Reference no: EM132120822

A janitorial supply superstore buys 214 of their most popular cleaning liquid each week for $11 each. Average cost of ordering and receiving a shipment is $6 per order. Holding cost is 1% of the price per month. The supplier lead time is 2.5 weeks. The store operates 50 weeks per year. Each order is received from the supplier in a single delivery and there are no quantity discounts.

a. What quantity should the store order with each order?

b. How many times per year will the store order?

c. How many weeks will elapse between two consecutive orders?

d. What is the reorder point if the company wishes to carry a safety stock of 20 units?

e. What is the store’s minimum total annual ordering and inventory carrying cost?

Reference no: EM132120822

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