Question on inventory level

timer Asked: Oct 29th, 2015

Question description

Appliance for Less is a local appliance store. It costs this store $21.07 per unit annually for storage, insurance, etc., to hold microwave in their inventory. Sales this year are anticipated to be 452 units. Each order costs $88. The company is using Economic Order Quantity model in placing the orders.

 It takes approximately 5 day(s) to receive an order after it has been placed. If the store insists on a 2 day(s) safety stock (assume 365-days a year), what should the inventory level be when a new order is placed?

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