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Sumco, a company that sells pump housings to manufacturers, would like to reduce its inventory cost by determining the optimal number of pump housings to obtain per order. The annual demand is 1,000 units, the ordering cost is $10 per order, and the average carrying cost per unit per year is $0.50. Using these figures, if the EOQ assumptions are met, calculate the
a) EOQ
b) Total annual inventory cost
c) Number of orders/year
d) Cycle length
e) Average inventory level
The system processes the order and sends the customer a confirmation and enters the order details in the Book Inventory data store. The system then initialises shipping by taking the order details and forwarding them to the Shipping Company.
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