Economic order quantity; ordering and carrying costs. Similar to Self-Study Problem 1
Marino Company predicts that it will use 25,000 units of material during the year. The expected daily usage is 200 units, and there is an expected lead-time of five days and a desired safety stock of 500 units. The material is expected to cost $5 per unit. Marino anticipates that it will cost $50 to place each order. The annual carrying cost is $0.10 per unit.
Required:
1. Compute the order point.
2. Determine the most economical order quantity by use of the formula.
3. Calculate the total cost of ordering and carrying at the EOQ point.
