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What is the company carrying cost at the eoq

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Problem 1: Smart Products buys 300,000 units of a crucial input per year from a supplier that fulfils its orders within two days of receiving them. Smart Products submits its orders directly to the supplier through a web interface, so its lead time is its supplier's two-day turnaround time. Each order costs Smart Products about P500 to place, while carrying costs are about P60 per unit per year. The company seeks to maintain a five day usage level in a safety stock. (Assume a 365-day year.) What is the company's carrying cost at the EOQ? Show solution.

Reference no: EM132744317

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