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Fisher Price produces various high quality BPA-free plastic toys. The production process requires a special industrial chemical. Currently, annual demand for this chemical 2000 pounds. The cost per pound from supplier is $10. Fisher Price also pays for inventory holding at 15% of the purchasing cost. Shipping and handling cost is $100 per order. There are 52 weeks in every year.
Please solve and show your work with the forumlas used.
1) How many pounds of this chemical should Fisher Price order each time?
2) What is the average inventory level under this ordering policy
3) What is the annual inventory holding cost?
4) How many orders TP places per year?
5) What is the annual inventory related cost (ordering + holding costs)?
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