Find the reorder point.
Scrumptious Spices manufactures a special blend of beef marinade. The company buys one of the spices used in the marinade in 10-pound bags that cost $5 each. The company uses 50,000 of the bags per year, and usage occurs evenly throughout the year.The average cost to carry a 10-pound bag in inventory per year is $1. The cost to place an order is $12. Determine the economic order quantity for the spice in terms of 10 pound bags.
If the company works 250 days per year, on average how many bags of spice are used per working day?
If the lead time for an order is normally five working days, determine the reorder point.
If the company normally carries 50 bags as safety stock, determine the reorder point for the spice.