For Supply Item ABC,Andrews Company Has Been Ordering 125 Units

Essay

For supply item ABC,Andrews Company has been ordering 125 units based on the recommendation of the salesperson who calls on the company monthly.A new purchasing agent has been hired by the company who wants to start using the economic-order-quantity method and its supporting decision elements.She has gathered the following information:
$$\begin{array} { | l | r | } \hline \text { Annual demand in units } & 250 \\\hline \text { Days used per year } & 250 \\\hline \text { Lead time, in days } & 10 \\\hline \text { Ordering costs } & \$ 100 \\\hline \text { Annual unit carrying costs } & \$ 20 \\\hline\end{array}$$ Required:
Determine the EOQ,average inventory,orders per year,average daily demand,reorder point,annual ordering costs,and annual carrying costs.