Refer to the information provided for M&M in Problem 15-17. Suppose that M&M must place orders in increments of 5,000 units and that it takes three days for each order to be delivered. (a) How many orders should M&M place each year? (b) At what inventory level should an order be placed?
Problem 15-17
Media Moguls (M&M) normally sells 240,000 units per year. It costs M&M $52 to purchase each unit, the fixed cost of ordering is $260, and the carrying costs equal 15 percent of the unit's purchase price.
a) What is the EOQ?
(b) How many orders should M&M place each year