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Specialized fastener to a local manufacturing

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Reference no: EM131568168

Consider a hardware supply warehouse that is contractually obligated to deliver 1,000 units of a specialized fastener to a local manufacturing company each week. Each time the warehouse places an order for these items from its supplier, an ordering and transportation fee of $20 is charged to the warehouse. The warehouse pays $1.00 for each fastener and charges the local firm $5.00 for each fastener. Annual holding cost is 25% of inventory value, or $.025 per year. The warehouse manager would like to know how much to order when the inventory gets to zero (Simchi-Levi, Kaminsky, and Smichi-Levi, 2008. Pg. 35).

Reference no: EM131568168

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