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ABC Company is a regional distributor of aftermarket automobile alternators. It currently places orders for 250 units at a time from a manufactures representative. The ABC Company sells 300 of these alternators per week. The ordering cost for this product is $75.00 per order. The cost of each alternator is $225.00 and the shop cost accountant has established that the annual alternator holding cost is 35% of the unit's value. The ABC Company operates 50 weeks per year. Based on this information. answer the following questions:
Do not include units in your answers. Do not round your intermediate calculations. Give the numbers only.
(1) What is the optimal order quantity? It is not possible to order a fractional number of alternators. Give your answer as a whole number (e.g., 500).
(2) Assuming inventory is consumed at a uniform rate what is the average inventory level that would result if the optimal policy were used? Round your answer to one decimal place.
(3) Using your answer from (1). what would be the period between orders in working weeks? Round your answer to two decimal places.
4) What savings would result if the ABC Company were to use the optimal order policy rather than its current policy? Give your answer to the nearest penny.
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