What is the reorder point for this inventory strategy

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Reference no: EM133446650

A company has a demand for 25,750 units annually. The holding cost is 33% of the item cost which is $10.00. The ordering or set-up cost is $250.00 per order and the lead time is 5 days. Assume that there are 350 days per year

Suppose a price break of $50 per order is offered for purchase quantities of 2,000 or greater.

a) Would you take advantage of this based on the economics of the two offers?

b) How much is the difference in the annual cost between these two options?

c) What is the reorder point for this inventory strategy? What is the inventory position immediately after an order is placed for the inventory strategy that you have selected?

Reference no: EM133446650

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