Cartwright computing expects to order 600000 memory chips, Ask an Expert

Economics

Cartwright Computing expects to order 600,000 memory chips for inventory during the coming year, and it will use this inventory at a constant rate. Fixed ordering costs are $300 per order; the purchase price per chip is $30; and the firm’s inventory carrying costs is equal to 15 percent of the purchase price. (Assume a 360-day year.)

a. What is the economic ordering quantity for chips?

b. If Cartwright holds a safety stock equal to a 30-day supply of chips, what is its average inventory level?

c. Assume that Cartwright holds a safety stock equal to a 30-day supply of chips. What is the maximum amount of inventory that will have on hand at any time, that is, what will be the inventory level right after a delivery is made?

d. How many orders should Cartwright place during the year?

e. If the lead time for placing an order is 5 days, and Cartwright holds a safety stock equal to a 30-day supply of chips, then at what inventory level should an order be placed?

f. If Cartwright holds a safety stock equal to a 30-day supply of chips, what is Cartwright’s minimum cost of ordering and carrying inventory?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91406081

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