What is economic order quantity placed on production

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An industrial machine tools manufacturer suppliers replacement parts from its inventory. For a particular part, the annual demand is expected to be 750 units. Machine setup costs are $50, carrying costs are 25 percent per year, and the part is valued in inventory at $35 each.

1. What is the economic order quantity placed on production and the average cost per unit?

2. What is the order frequency?

3. Suppose that it takes 1.5 weeks to set up production, what will be the optimal inventory policy?

4. If the carrying cost becomes 20 percent cheaper, how do the order quantity and average cost per unit change?

Reference no: EM132239383

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