MIN/MAX Reorder Point A company is interested in establishing a reorder point for an item using a Min/ Max reorder point system. If the company wants to maintain 200 units of safety stock, what is the reorder point if the item has an average daily usage of 30 units and a lead time of four days? Reorder level = Safety stock + (Average daily usage x Lead time) Reorder Level= 200 + (30 x 4) Reorder Level= 320 If this company wants to increase the safety stock that it plans to hold from 200 to 365 units, what would be (a) the annual carrying charge per unit when holding 200 units of safety stock and (b) the annual carrying charge per unit cost when holding 365 units of safety stock when: Annual demand = 11,000 units Unit price = $12.50 Inventory carrying charge = 20% Inventory carrying charge per unit when holding 200 units of safety stock: Inventory carrying charge per unit when holding 365 units of safety stock:

MIN/MAX Reorder Point A company is interested in establishing a reorder point for an item using a Min/ Max reorder point system. If the company wants to maintain 200 units of safety stock, what is the reorder point if the item has an average daily usage of 30 units and a lead time of four days? Reorder level = Safety stock + (Average daily usage x Lead time) Reorder Level= 200 + (30 x 4) Reorder Level= 320 If this company wants to increase the safety stock that it plans to hold from 200 to 365 units, what would be (a) the annual carrying charge per unit when holding 200 units of safety stock and (b) the annual carrying charge per unit cost when holding 365 units of safety stock when: Annual demand = 11,000 units Unit price = $12.50 Inventory carrying charge = 20% Inventory carrying charge per unit when holding 200 units of safety stock: Inventory carrying charge per unit when holding 365 units of safety stock:

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints

Section: Chapter Questions

Problem 2CE: Sterling Corporation has an EOQ of 5,000 units. The company uses an average of 500 units per day. An...

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