The annual demand for red, medium polo shirts, for Clothes, Inc. is 25,000 units. The cost of placing an order is $80, and the cost of carrying one unit in inventory for one year is $25.
Required:
a. Use the economic order quantity model to determine the optimal order size.
b. Determine the reorder point assuming a lead time of 10 days, and a work year of 250 days.
c. Assuming the maximum lead time is 20 days and the maximum daily demand is 125 units, determine the safety stock required to prevent stockouts.

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The Answer of The annual demand for red, medium polo shirts, for Clothes, Inc. is 25,000 units. The cost of placing an order is $80, and the cost of carrying one unit in inventory for one year is $25.
Required:
a. Use the economic order quantity model to determine the optimal order size.
b. Determine the reorder point assuming a lead time of 10 days, and a work year of 250 days.
c. Assuming the maximum lead time is 20 days and the maximum daily demand is 125 units, determine the safety stock required to prevent stockouts.

The Annual Demand for Red, Medium Polo Shirts, for Clothes