Fisk Corporation is trying to improve its inventory control system and has installed an online computer at its retail stores . Fisk anticipates sales of 75,000 units per year, an ordering cost of $8 per order, and carrying costs of $1.20 per unit.
a. What is the economic ordering quantity?
b. How many orders will be placed during the year?
c. What will the average inventory be?
d. What is the total cost of ordering and carrying inventory?
Plus following additional information regarding Fisk Corporation. Fist operates a 300-day or 50-week cycle; keeps one order size of EOQ as safety stock to be used against unfavorable events; it takes 6 business days to receive a new shipment from suppliers. Based on this new information calculation following questions:
1. Usage rate in units.
2. How often Fisk should place an orders?
3. At what level of inventory the order is placed? Both with and without safety stock?
4. What is total cost of inventory with bith safery stock and without safety stock?
5. What assumptions are made about the EOQ model?
6. If Fisk uses just-in-time inventory system, what effect is that likely to have on the number and location of suppliers?
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