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Inventory Management

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Furniture Manufacturers Inc uses 20,000 loads of lumber per year. A load of lumber costs $500 and the carrying cost is 10 percent of the unit cost. The cost to order is $200 per order and the lead time is three working days. Assuming 200 working days determine, (a) the economic order quantity, (b) the reorder point, (c) number of orders per year (working days between orders.

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Solution Summary

Solution describes the steps to calculate EOQ, reorder point and number of orders per years.

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a. EOQ

D =Total demand= 20000 units per year
S = ordering cost=$200 per order
H = carrying cost=10% of ...

Solution provided by:
Lokesh Jain, MSc
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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