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What is the annual savings to evans company

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Reference no: EM132571543

Evans Company has the following information:

Annual demand                           4000 units

Order size                                1000 units

Ordering cost per order                   £500

Carrying costs per unit for one year      £50

Lead time (maximum 20 days)           10 days

Maximum daily use                           25 units

Work year                                     250 days

Required:

Question (a) Determine the economic order quantity for Evans.

Question (b) What is the annual savings to Evans Company if it was to change from an order size of 1000 to the economic order quantity? Discuss

Question (c) What is the reorder point? Discuss.

Question (d) What is the safety stock needed to prevent stock-outs? Discuss.

Reference no: EM132571543

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