Question: In the second year, Fisk Corporation finds that it can reduce ordering costs to $2 per order but that carrying costs stay the same at $1.20. Also, volume remains at 75,000 units.
a. Recompute a, b, c, and d in Problem for the second year.
b. Now compare years one and two and explain what happened.
Problem: Fisk Corporation is trying to improve its inventory control system and has installed an online computer at its retail stores. Risk 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?