The Nordling Corp. has developed a new type of widget. The local distributor expects to increase his sales by 19% over the past year due to this new development. Last year's sales were $124,000 at a selling price of $106 per unit. A safety stock of 25 units has eliminated stockouts. The manager would like to cut costs as much as possible and comes to you for advice. Warehouse Space $1.54 per unit Materials Handling Expense $1.17 per unit Insurance Premium $1.24 per unit Total Ordering Cost $96 per order
What is the carrying cost per unit?
How many units will be sold next year?
What is the economic order quantity next year?
What is the amount of average inventory?
How many orders will be made per year?
What is the total cost of this inventory decision?