Diagnostic Supplies has expected sales of 50,000 units per year, carrying costs of $2 per unit, and an ordering cost of $5 per order.
a. What is the economic ordering quantity?
b-1. What is the average inventory?
b-2. What is the total carrying cost?
Assume an additional 40 units of inventory will be required as safety stock.
c-1. What will the new average inventory be?
c-2. What will the new total carrying cost be?