Answered

CarCut Corporation has been employing the Fixed-Order Quantity model to manage the inventory of its best selling 3D printer. The current inventory policy places exactly 60 orders each year. The monthly inventory holding cost is $25 per unit and the setup cost is $50 per order. The demand during lead time is constant, and it takes a lead time of 2 days to receive a shipment. Assume CarCut operates 360 days per year. What is the optimal reorder point in units

Answer :

Answer: See explanation

Explanation:

The optimal reorder point in units is calculated as the average daily sales unit multiplied by the delivery lead time.

In the question, we're not provided with the annual demand as this is vital in order to know the average daily unit. Therefore, the question is incomplete

ANTHOUGOGO

The CarCut Corporation's optimal reorder point in units is 208 units.

Data and Calculations:

Number of orders per year = 60 orders

Monthly inventory holding cost = $25 per unit

Setup cost = $50 per order

Number of operating days per year = 360 days

Lead time = 2 days

Number of times for orders per year = 180 (360/2)

Total annual demand = 10,800 (60 x 180)

Optimal reorder point in units = EOQ = square root of (2 x 10,800 x $50)/$25

= 208 units

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