Lott manufacturing, Inc. has been ordering parts for its production proces in lots of 10,000 units. Each order costs the firm $50 to place and holding costs per unit aver $3. lott uses 200,000 units every 250 days.
a. calculate EOQ
b. what is the difference in inventory costs between the EOQ and the current order quantity of 10,000 units?
c. Given the EOQ calculated in part a., how many orders should be placed and what is the average inventory balance?
d. If it takes two days to receive an order from suppliers, at what inventory level should Lott place another order?