Make sense to order a different quantity to reduce costs

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Reference no: EM13965601

Anna and Joachim have been ordering kits to assemble nativity sets in a fixed interval every 3 weeks, which they feel is sufficient to keep pace with demand of 77 kits per week. They incur ordering costs of $33.00 every time they order and it costs them $0.29 per kit, per week, for inventory carrying costs. They believe demand is very stable, lead time is 2 weeks and does not vary.

Should they continue to order in this interval, or would it make sense to order a different quantity to reduce costs, thereby changing the order interval? (We were advised to use Fixed Order Interval and Economic Order Quantity to compute the answers)

Reference no: EM13965601

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