Evans Company Has the Following Information ADetermine the Economic Order Quantity for Evans

Essay

Evans Company has the following information: $\begin{array}{ll}\text { Annual demand } & 4,000 \text { units } \\\text { Order size } & 1,000 \text { units } \\\text { Ordering cost per order } & £ 500 \\\text { Carrying costs per unit for one year } & £ 50 \\\text { Lead time (maximum } 20 \text { days) } & 10 \text { days } \\\text { Maximum daily use } & 25 \text { units } \\\text { Work year } & 250 \text { days }\end{array}$
a.Determine the economic order quantity for Evans.
b.What is the annual savings to Evans Company if it was to change from an order size of 1,000 to the economic order quantity?
c.What is the reorder point?
d.What is the safety stock needed to prevent stockouts?