The following information applies to water springs which

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The following information applies to Water Springs,which supplies landscaping waterfalls.Water Springs purchases the waterfalls from a manufacturer which has a reputation for very high quality in its manufacturing operation. The use a 365-day calendar throughout the company.

Annual demand 21,400 units

Lead time in days 10 days

Cost of placing an order $30/order

Cost for handing and storing inventory $2/unit

Cost (purchase price) $45/unit

Required rate of return 20%

a. What is the order quantity that minimizes the relevant ordering and carrying costs?

b. At what level of inventory should Water Springs reorder more inventory?

Reference no: EM13592736

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