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XYZ LTD is a company based in Cape Town. XYZ imports printers from China and sells it to local corporate clients. Delivery normally takes 3 weeks. XYZ sells 5432 printers on average per year. Annual carrying costs is 23%. XYZ negotiated the purchase price per printer to be $341. Every time that XYZ places an order the fixed ordering cost per order is $1110.
1. What is the economic order quantity of printers for XYZ?
2. Assuming certainty in delivery and usage, at what inventory level should the firm reorder?
3. Assume a 263-unit safety stock is carried. What will the additional inventory cost be?
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