Every month, ABC Computers uses 2,000 units of a fan in assembling laptops. The fan's unit cost (value) is $20. It costs ABC $100 to place an order with the fan supplier (including shippment and receiving costs) and the fan's annual holding cost is $4.80 per unit. Once placed, it takes 3 days for an order to arrive in stock. (Assume there are 360 days in a year not 365)
1) Compute EOQ
2) How many orders does the firm place in a year if order quantity is equal to EOQ?
3) What is the annual Inventory holding cost for this product at EOQ?
4) What is Total Annual Cost?
5) What is the re-order point?