Economic order quantity, average inventory and total carrying cost
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Higgins Athletic Wear has expected sales of 22,500 units a year, carrying costs of $1.50 per unit, and an ordering cost of $3 per order.
a) What is the economic order quantity?
b) What will be the average inventory? The total carrying cost?
c) Assume an additional 30 units of inventory will be required as safety stock. What will the new average inventory be? What will the new total carrying cost be?
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This solution answers questions regarding expected sales, carrying costs, and ordering costs.
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Higgins Athletic Wear has expected sales of 22,500 units a year, carrying costs of $1.50 per unit, and an ordering cost of $3 per order.
a) What is the economic order ...
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- BE, Bangalore University, India
- MS, University of Wisconsin-Madison
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