Problem:
For supply item ABC, 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 hired by the company who wants to start using the economic-order-quantity method and its supporting decision elements. She has gathered the following information:
|
Annual demand in units
|
250
|
|
Days used per year
|
250
|
|
Lead time, in days
|
10
|
|
Ordering costs
|
$100
|
|
Annual unit carrying costs
|
$20
|
Requirement:
Problem: Determine the EOQ, average inventory, orders per year, average daily demand, reorder point, annual ordering costs, and annual carrying costs.
Note: Please answer in proper manner and show all computations