What is the cycle time and what is the order quantity

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Reference no: EM13845622

Ray’s Satellite Emporium wishes to determine the best order size for its best-selling satellite dish (model TS111). Each unit costs $160. Ray has estimated the annual demand for this model at 1000 units. His cost to carry one unit is 5% of the product cost per month per unit. He has estimated that each order costs $500 to place. Answer the following questions. (Keep 2 decimal places for non-integer results)

1. What is the holding cost (in dollars) per unit per year?

2. If the company orders 200 units each time, what is the cycle time (in months)? What is the order frequency (how many cycles per year)? What is the annual inventory holding cost? What is the annual inventory ordering cost?

3. If the company orders every other month, what is the cycle time and what is the order quantity?

Reference no: EM13845622

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