What is the economic order quantity

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Lisabi Manufacturing Association (LMA) Inc., situated in Ogun State, Nigeria, manufactures a product that requires turbine blades in its construction. It plans on building 2500 units of the product over the next year, and therefore, has a need for 2500 units of turbine blades. The cost of placing an order for turbine blades is $20.00, and each unit costs $5.00 per year to store in inventory. Each turbine blade has a cost of $250.00

1. What is the Economic Order Quantity?

2. What is the Total Annual Inventory Cost

3. Determine the number of times orders are placed each year.

4. A management consultant has recommended using a Backorder Model instead; where backorders cost $5.00 per unit per year. Determine the optimal order quantity in this case.

5. What is the new Total Annual Inventory Cost?

6. Determine the maximum Inventory Level for the Backorder Model.

7. Determine the Maximum Waiting Time for the Backorder Model.

8. If the Lead-time

Reference no: EM132226642

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