Question: Widget Co. has the following data available relative to its investment in materials:
Number of units of material used annually 20,000
Number of workdays in a year 250
Cost of placing an order $20
Annual carrying cost per unit of inventory $5
1. Compute the economic order quantity
2. Give some examples of order costs and carrying costs.
3. If the company requires a safety stock of 200 units and has an anticipated lead time of 5 days, what is the order point?