For supply item MT, Bluesky Company has been ordering 150 units based on the recommendation of the salesperson who calls on the company monthly. The company has hireda new purchasing agent, who wants to start using the economic-order-quantity method and its supporting decision elements. She has gathered the following information:
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Annual demand in units
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300
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Days used per year
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300
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Lead time, in days
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20
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Ordering costs
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$125
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Annual unit carrying costs
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$25
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Determine the EOQ, average inventory, orders per year, average daily demand, reorder point, annual ordering costs, and annual carrying costs.