Books, etc., a nationwide chain of bookstores, anticipates that annual demand for the paperback version of a best-selling novel will be 150,000 copies. The books cost the firm $2 each. Books, etc. has determined that the optimal order quantity (EOQ) is 30,000 copies. It takes 20 days between when an order is placed and when the deliv- ery is received. Carrying costs are 15 percent of the inventory value. Determine the following:
a. Optimal ordering frequency
b. Average inventory and annual carrying costs
c. Reorder point.
Books, etc. decides that it wants to maintain a 60-day safety stock of the novel to meet unexpected demand and possible shipment delays from the publisher. Determine the following:
d. Amount of safety stock, in units
e. Average inventory and annual carrying costs
f. Reorder point.