Ahmad is attempting to perform an inventory analysis on one of his most popular products: Production Operation Management Home Work, UUM, Malaysia

Question 1 (10 Marks)

Ahmad is attempting to perform an inventory analysis on one of his most popular products. Annual demand for this product is 5,000 units; carrying cost is RM5SO per unit per year; order costs for his company typically run nearly RM30 per order; and lead time averages 10 days (assume 250 working days per year}

a) What is the economic order quantity (EOQ)?

b) What is the average inventory?

c) What is the optimal number of orders per year?

d) What is the optimal number of working days between orders?

e) What is the total annual inventory cost (carrying costs + ordering costs)?

f) What is the reorder point?

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