QUESTION - 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:
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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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Determine the EOQ, average inventory, orders per year, average daily demand, reorder point, annual ordering costs, and annual carrying costs.