Question

In: Finance

Alexis Company uses 979979 units of a product per year on a continuous basis. The product...

Alexis Company uses

979979

units of a product per year on a continuous basis. The product has a fixed cost of

$4242

per order, and its carrying cost is

$44

per unit per year. It takes 5 days to receive a shipment after an order is placed, and the firm wishes to hold 10 days' usage in inventory as a safety stock.

a. Calculate the EOQ.

b. Determine the average level of inventory.

(Note:

Use a 365-day year to calculate daily usage.)

c. Determine the reorder

point.

d. Indicate which of the following variables change if the firm does not hold the safety stock: (1) order cost, (2) carrying cost, (3) total inventory cost, (4) reorder point, (5) economic order quantity.

a. Alexis' EOQ is

nothing

units. (Round to the nearest whole number.)

Expert Solution

Following assumptions have been taken to solve this sum:

Average Delivery Time= 5 days

For Average consumption, 979979 units has been divided by 365 days.

jeff jeffy answered 6 months ago

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