Finance: EOQ, Average Inventory
Question
Appliance for Less is a local appliance store. It costs this store $16.02 per unit annually for storage, insurance, etc., to hold microwave in their inventory. Sales this year are anticipated to be 586 units. Each order costs $75. The company is using Economic Order Quantity model in placing the orders.
It takes approximately 4 day(s) to receive an order after it has been placed. If the store insists on a 6 day(s) safety stock (assume 365-days a year), what should the inventory level be when a new order is placed?