Reference no: EM132515654

Consider the following inventory information and relationships for the F. M. Beaner Corporation:

1. Orders can be placed only in multiples of 100 units.
2. Annual unit usage is 300,000.
3. The carrying cost is 30% of the purchase price of the goods.
4. The purchase price is $10 per unit.
5. The ordering cost is $50 per order.
6. The desired safety stock is 1000 units. (This does not include delivery- time stock.)
7. Delivery time is 2 weeks.

Question 1: What is the optimal EOQ level?

Question 2: How many orders will be placed annually?

Question 3: At what inventory level should a reorder be made?

Question 4: What is the total cost of EOQ based system? Don't forget Safety stock.

Question 5: What happens to EOQ if the carrying cost rises? Explain.