Each year, Shopalot Stores sells 10,000 cases of soda. The company is trying to determine how many cases to order each time it orders. It costs $150 to process each order, and the cost of carrying a case of soda in inventory for one year is 20% of the purchase price. Each case of soda costs $4.00.
Each time an order is placed, how many cases of soda should the company order?
Determine the reorder point if Shopalot Stores are open for sale 365 days a year and lead time for an order is 4 days. State the inventory policy.
What is the average inventory level?
What is the total annual inventory holding cost?
How many orders are placed during the year?
What is the total annual ordering costs?