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ACME, Inc. is a store that sells specialized desert-environmental gadgets. Its newest item, which looks very much like an anvil, costs ACME $600 per unit. ACME's holding cost rate is 22%. Ordering costs are estimated to be $70 per order. If demand for this new gadget is expected to be constant with a rate of 20 units per month, what is the recommended order quantity?
A. 24.0 units
B. Cannot be determined.
C. 16.3 units
D. 15.95 units
The lead time for an order is 5 days. Assume ACME has 250 days available per year for work. What is the reorder point?
A. 240/250 x 5 = 4.8 units
B. 15.95/5 = 3.19 units
C. Cannot be determined.
D. 240/5 = 48 units
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