Tele-Reco is a new specialty store that sells TV’s, DVD players, video games and other television related products. A new manufactured DVD player costs Tele-Reco $600 per item. Tele-Reco’s inventory-carrying cost is figured at an annual rate of 22 percent. Ordering costs are estimated to be $70 per order.
If demand for the new DVD player is expected to be at a constant rate of 20 items per month, what is the recommended order quantity for the DVD players?
What are the estimated annual inventory holding and ordering costs associated with this product?
How many orders will be placed per year?
With 250 working days per year, what is the cycle time for this product?