A local grocery store faces demand for one of its items at a constant rate of 20,000 boxes per year. It costs them $5 to process an order and $0.50 per box per year to carry the item in stock. The stock is received three working days after an order is placed. Assume 250 working days in a year and no backordering.
1. What is the demand during lead time assuming no variability?
a. 320
b. 80
c. 250
d. 600
2. What is EOQ ?
a. 682
b. 600
c. 200
d. 750
3. What is the total inventory cost at EOQ, excluding the item cost?
a. 316.23
b. 350.65
c. 157.98
d. 431.93
4. What is the time between orders (TBO) in working days if you were ordering EOQ?
a. 7.9
b. 0.0317
c. 0.317
d. 12.9