Answer:
(e) $3,873
(f) 200 units
Explanation:
(e)
Annual carrying cost:
= Average Inventory × carrying cost per unit
= 38.73 × 50
= $1,936.5
Annual Ordering cost:
= Optimal number of orders per year × Ordering cost per order
= 64.55 × 30
= $1,936.5
Therefore, the total cost is the sum of annual ordering cost and annual holding cost.
Hence,
Total Cost:
= Annual Ordering Cost + Annual Holding cost
= ($1,936.5 + $1,936.5)
= $3,873
Therefore, the total annual inventory cost is $3,873.
(f) Reorder Point:
= Average Daily Unit Sales × Delivery lead time
= (Annual demand ÷ Working days per year) × Delivery lead time
= (5,000 ÷ 250) × 10
= 200 Units
Therefore, the re-order point in 200 units.