Visser, Inc. sells nutritious rich crab meat in 24 ounce recyclable containers. The cost to Visser to purchase crab meat and packaging is $50 per unit. The annual demand is 2000 units. Holding costs are 20% of unit cost, the order costs are $25 per order, and the backorder cost is $30 per unit.
How many units should Visser order should management decide to implement a backorder policy?
What is the average inventory level for units backorder?
What is the maximum number of units on backorder?
How many orders would be placed in one year?
What is annual Total Cost (TC)?