Thomas
Kratzer
is
the
purchasing
manager
for
the
headquarters
of
a
large
insurance
company
chain
with
a
central
inventory
operation.
Thomas's
fastest-moving
inventory
item
has
a
demand
of
5,900
units
per
year.
The
cost
of
each
unit
is
$97,
and
the
inventory
carrying
cost
is
$11
per
unit
per
year.
The
average
ordering
cost
is
$31
per order.
It
takes
about
5
days
for
an
order
to
arrive,
and
the
demand
for
1
week
is
118
units.
(This
is
a
corporate
operation,
and
there
are
250
working
days
per
year).
a)
What
is
the
EOQ?
182.36
units
(round
your
response
to
two
decimal
places).
b)
What
is
the
average
inventory
if
the
EOQ
is
used?
91.18
units
(round
your
response
to
two
decimal
places).
c)
What
is
the
optimal
number
of
orders
per
year?
32.35
orders
(round
your
response
to
two
decimal
places).
d)
What
is
the
optimal
number
of
days
in
between
any
two
orders?
7.73
days
(round
your
response
to
two
decimal
places).
e)
What
is
the
annual
cost
of
ordering
and
holding
inventory?
$
2005.94
per
year
(round
your
response
to
two
decimal
places).
f)
What
is
the
total
annual
inventory
cost,
including
the
cost
of
the
5,900
units?
$
574305.94
per
year
(round
your
response
to
two
decimal places).
