Reliant Auto estimates the annual demand for its newest model is 60,000 units, the cost of order preparations is $55,000, the inventory carrying cost per car per year is $5,000 and the order lead-time is 1 month. Reliant keeps 500 units of safety stock.
What is the order frequency?
What is the Demand During Lead Time in units?
What is the Maximum Inventory Level Reliant should have, assuming orders arrive on time and inventory is depleted as predicted?
What is the Minimum Inventory Level should have, assuming orders arrive on time and inventory is depleted as predicted?
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