What is the economic order quantity

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Reference no: EM133991319

Assignment:

Marilyn Hart is the purchasing agent for Central Valve Company, which sells industrial valves and fluid- control devices. One of Central's most popular valves is the Western, which has a stable annual demand of 4,000 units. The cost of each valve is $90, and the inventory carrying cost is $9. Marilyn has made a study of the costs involved in placing an order for any of the valves that Central stocks, and she has concluded that the average ordering cost is $25 per order. Furthermore, it takes about 5 working days for an order to arrive from the supplier. During this time, the demand per week for valves is approximately 80.

a. What is the economic order quantity?

b. What is the average inventory if the economic order quantity is used?

c. What is the optimal number of orders per year?

d. What is the optimal number of days between any two orders, assuming 250 working days per year?

e. What is the total annual cost? f. What is the reorder point?

Reference no: EM133991319

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