Determine the economic order quantity

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Vergas Enterprises wishes to determine the economic order quantity (EOQ) for a critical and expensive inventory item that it uses in large amounts at a relatively constant rate throughout the year. The firm uses 450 000 units of the item annually and has order costs of R375 per order; its carrying costs associated with this item are R28 per unit per year. The firm plans to hold safety stock of the item equal to five days of usage, and it estimates that it takes 12 days to receive an order of the item once placed. Assume a 365-day a year

Reference no: EM131188076

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