Explore BrainMass
Share

Calculating EOQ, safety stock and inventory costs

This content was STOLEN from BrainMass.com - View the original, and get the solution, here!

Given the following information, determine an inventory management system for an item in demand 50 weeks/year.
Item Cost $10
Order Cost $250
Annual Holding Cost $3.33/unit
Annual Demand 25,750
Weekly demand 515
Std Dev of Demand 25/week
Lead Time 1 week
Std Dev of Lead Time 0.1 week
Service Level 95%

a. State the order quantity and re-order point
b. Determine the annual holding and order costs
c. If a price break of $50/order was offered for orders over 2000 units, should you plan on 2000 unit orders?

© BrainMass Inc. brainmass.com September 25, 2018, 1:26 pm ad1c9bdddf - https://brainmass.com/business/inventory-management/calculating-eoq-safety-stock-inventory-costs-566185

Solution Summary

Solution depicts the methodology to find EOQ, safety stock and inventory costs in the given case.

$2.19