Problem
A machine shop uses 2,500 brackets during the course of a year. These brackets are purchased from a supplier 90 moles away. The following information is known about the brackets:
Annual demand 2,500
Holding cost per bracket per year $1.5
Order cost per order $18.75
Lead time 2 days
Working days per year 250
1. What would be the economic order quantity (EOQ)?
2. What would be the average inventory? What would be the annual inventory holding cost?
3. How many orders should be made each year? What would be the annual order cost?
4. What is the total annual cost of managing the inventory?
5. What is the time between orders?
6. What is the reorder point?