Harrowing Company has the following information:
Annual demand 3,500 units
Order size 500 units
Ordering cost per order $400
Carrying costs per unit for one year $40 Lead time (maximum 20 days) 10 days
Maximum daily use 25 units
Work year 250 days
Required:
a. Determine the economic order quantity for Harrowing.
b. What is the annual savings to Harrowing Company if it was to change from an order size of 1,000 to the economic order quantity?
c. What is the reorder point?
d. What is the safety stock needed to prevent stockouts?

Question

Quizplus · Accepted Answer

The Answer of Harrowing Company has the following information:
Annual demand 3,500 units
Order size 500 units
Ordering cost per order $400
Carrying costs per unit for one year $40 Lead time (maximum 20 days) 10 days
Maximum daily use 25 units
Work year 250 days
Required:
a. Determine the economic order quantity for Harrowing.
b. What is the annual savings to Harrowing Company if it was to change from an order size of 1,000 to the economic order quantity?
c. What is the reorder point?
d. What is the safety stock needed to prevent stockouts?

Harrowing Company Has the Following Information