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ECONOMIC ORDER QUANTITY
The firm uses 223200 units of the item annually. It has order costs of R150 per order, and its carrying costs associated with this item are R20 per unit per year.
The firm plans to hold safety stock of the item equal to 4 days of usage, and it estimates that it takes 10 days to receive an order of the item once placed. Assume a 360 day year.
1. Calculate the firm's EOQ for the item of inventory
2. What is the firms total cost based upon the EOQ calculated above
3. How many units of safety should the firm hold?
4. What is the firm's re-order point for the item on inventory being evaluated?
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