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Qusetion: Carter Cohen, inventory control manager for Raydex, receives wheel bearings from Wheel & Gears, a small producer of metal parts. Unfortunately, Wheel & Gears can produce only 5,000 wheel bearings per day. Raydex receives 100,000 wheel bearings from Wheel & Gears each year. Because Raydex operates 200 working days each year, the average daily demand of wheel bearings by Raydex is 500. The ordering cost for Raydex is $400 per order, and the carrying cost is $6 per wheel bearing per year. How many wheel bearings should Raydex order from Wheel & Gears at one time? Wheel & Gears has agreed to ship the maximum number of wheel bearings that it produces each day to Raydex when an order has been received.

Strategic Management, Management Studies

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