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TK Fordish is the purchasing manager for the headquarters of a large insurance company chain. TK’s fastest-moving inventory item has a demand of 5000 units per year. The cost of each unit is $80.00, and the inventory carrying cost is $10.00 units per year. The average ordering cost is $25.00 per order. It takes about 4 days for an order to arrive. Consider 250 working days per year. a) What is the EOQ? b) What is the average inventory if the EOQ is used? c) What is the optimal number of order per year? d) What is the optimal number of days in between any two orders? e) What is the annual cost of ordering and holding inventory? f) What is the total annual inventory cost, including the cost of the 5000 units?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M92556630

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