Books, etc., a nationwide chain of bookstores, anticipates that annual demand for the paperback version of a best-selling novel will be 150,000 copies. The books cost the firm $2 each. Books, etc. has determined that the optimal order quantity (EOQ) is 30,000 copies.
It takes 20 days between when an order is placed and when the delivery is received. Carrying costs are 15 percent of the inventory value. Determine the following:
a. Optimal ordering frequency
b. Average inventory and annual carrying costs
c. Reorder point
Books, etc. decides that it wants to maintain a 60-day safety stock of the novel to meet unexpected demand and possible shipment delays from the publisher. Determine the following
d. Amount of safety stock, in units
e. Average inventory and annual carrying costs
f. Reorder point.