Problem:
Bart's Barometer Business (BBB) is a retail outlet that deals exclusively with weather equipment. Currently, BBB is trying to decide on an inventory and reorder policy for home barometers. These cost BBB $50 each and demand is about 500 per year distributed fairly evenly throughout the year. Reordering costs are $60 per order and holding costs are figured at 20% of the cost of the item. BBB is open 300 days a year (6 days a week and closed two days in August). Lead time is 60 working days.
Required:
Question 1: What is the optimal reorder quantity?
Question 2: What is the reorder point?
Question 3: How many times a year would BBB reorder?
Question 4: What are total annual inventory costs?
Note: Provide thorough explanation of the given question.