Reference no: EM132785192

Item X is a standard item stocked in a company's inventory of spare parts. Each year, the firm uses about 2,000 units of Item X, which costs Php 1,000 per unit. Storage costs, which include insurance and cost of capital, amount to 18 percent of item unit cost. Placing an order for more of Item X costs Php 400. The company operates 360 days per year and Item X is received 9 days after placement of order.

Question A. How many units of Item X should be ordered each time?

Question B. When should Item X be ordered?

Question C. Whenever Item X's inventory level drops to 50 units

Question D. How many times per year would Item X be ordered?

Question E. What is Item X's average inventory level?

Question F. How much would be Item X's total annual purchasing cost?

Question G. How much would be Item X's total annual procurement cost?

Question H. How much would be Item X's total annual storage cost?

Question I. How much would be Item X's total annual stockout cost?

Question J. Including its total annual purchasing cost, how much would be Item X's total annual inventory cost?