How many orders should make to minimize inventory costs

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Reference no: EM132205764

Use the following information to answer the next four questions.

ABC Inc. is about to begin production on two homes in a new housing subdivision. ABC anticipates that it will need 80,000 square feet of lumber over its 450 day construction cycle. Ordering and holding costs are $6/order and $8/sq.ft., respectively. ABC's turnaround time on a lumber order is 2 days.

1. How many orders should ABC make to minimize inventory costs? Round intermediate steps and your final answer to two decimals.

2. At what inventory level should ABC order lumber if the company wants to minimize inventory costs? Round intermediate steps and your final answer to two decimals.

3. What is the total cost per inventory order for ABC? Round intermediate steps and your final answer to two decimals.

4. How many units of lumber will ABC have in its inventory at the end of the 3rd day of construction? Round intermediate steps and your final answer to two decimals.

Reference no: EM132205764

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