A firm desires to control inventory levels so as to minimize the sum of holding and order costs. It costs the firm $20 to place an order. The firm estimates its inventory carrying costs at $4/unit/year. Weekly demand is 100 units and there are 50 weeks in the work year. The item costs $10 per unit. Leadtime for the product is 4 weeks.
6. What quantity of items should the firm order each time so as to minimize total inventory costs?
a. 32
b. 45
c. 224
d. 316
e. 145
7. For the order quantity obtained in Q6, what will be the total annual holding cost.
a. 50
b. 100
c. 632
d. 447
e. 224
8. For the order quantity obtained in Q6, what will be the annual ordering cost.
a. 447
b. 50
c. 100
d. 316
e. 224