Question: Tom Thumb soils roughly 4000 boxes of chocolate chip cookies each year. Each box of chocolate chip cookies costs Tom Thumb $2. Ordering costs are $20, and annual carrying costs are 10% of the purchase price. The store operates 51 weeks per year. Each order is received from the manufacturer in a single delivery and the lead time is 2 weeks.
How much should the store order at one time?
How many times per year should the store order?
How many weeks should be between two consecutive orders?
What is the store's minimum total annual cost of placing orders & carrying inventory?
What is the reorder point if the company wishes to carry a safety stock of 100 boxes?