Question: For supply item XYZ, Andrews Company has been ordering 125 units based on the recommendation of the salesperson who calls on the company monthly. A new purchasing agent has been employed by the company who wants to start using the economic-order-quantity method & it's supporting decision elements. She has gathered the following data:
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Annual demand in units
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250
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Days used per year
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250
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Lead time, in days
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10
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Ordering costs
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$100
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Annual unit carrying costs
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$20
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Calculate the EOQ, average inventory, orders per year, reorder point, annual ordering costs, average daily demand and annual carrying costs.