INVENTORY MODEL

ROUND ALL NUMBERS TO AT LEAST TWO (2) DECIMAL PLACES

ABC Electronics is a maker of calculators. They use (demand) 216,000 printed circuits per year. The purchase cost is $14.15 and the annual inventory holding cost is figured at 23 percent.

The cost to place each order is $1700 and the lead-time is 4 days. The company operates for 250 days each year

1. What is the Economic Order Quantity [Q*]?
   USE THE ECONOMIC ORDER QUANTITY, Q*, (in A) TO ANSWER QUESTIONS (B - E)
2. What is the Reorder Point?
3. What is the Total Annual Inventory Cost (including purchase cost)?
4. What is the number of days between orders?
5. What is the Average inventory level for the year?
6. If ABC were to be offered a 1 percent discount off the Purchase Cost of $14.15 for order quantities of 40,000 or more and would still have to pay $14.15 for order quantities less than 40,000, then:

1. What Quantity should they order?
2. What Purchase Cost (Cp) should they pay for the printed circuits?
3. Then what would be the Total Annual Inventory Cost (order + hold + purchase)?

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Solution: The downloadable solution consists of 3 pages, 310 words and 2 charts.
Deliverable: Word Document