The wall drug store stocks a popular brand of sunscreen. The average demand for the sunscreen is 2100 bottles per year. The cost of each bottle is $2.50. The ordering cost is $10 per order, and the annual carrying cost is 20% of the unit cost. The lead time to receive an order is 5 5 days, and the expected demand during those 5 days is 25 bottles.
a) How often should the product be ordered?
b) What is the annual total inventory cost that should be expected?
c) If the company is going to place an order now and the current inventory level is 3 sunscreens, what should be the order quantity if the upper inventory target is 28 sunscreens?