A local lamp store expects to sell 2000 lamps in the coming year. It costs the store $1.00 in carrying costs for each
lamp and $10.00 for each order placed.
a. What is the economic order quantity for the lamps?
b. How many orders will be placed each year?
c. If the store wants a one-week safety stock and it takes one week to receive an order after it has been placed,
what should the inventory level be when a new order is placed? Assume a 50-week year.
a. Q* = 2SO
C =
210.(2000)
1 = 200
b. # orders = S/Q* = 2000/200 = 10 orders per year
c. 1-week supply = 2000/50 = 40 lamps
order level = safety stock + 1 - week order lag
= 40 + 40
= 80 lamps is the order point
You might also like to view...
The Confidential Client Information Rule is violated when a member in public practice
a. Provides client profit and loss percentages to a trade association without the client's consent b. Uses outside computer services to process tax returns c. Performs consulting services for similar clients d. Advises potential consulting services clients about previous problems on similar engagements
Which of the following is an advantage of messaging over email?
A) Messaging functions on an open system B) Anyone can participate in messaging C) Messaging is better for conversational exchanges D) There are no centralized control mechanisms for security threats on messaging systems E) Alerts can be set up to let the receiver know about incoming messages