Diagnostic Supplies has expected sales of 175,000 units per
year, a carrying cost of $5 per unit, and an ordering cost of $7
per order.
| (a) | What is the economic order quantity? |
| Economic order quantity |
units |
| (b-1) | What is average inventory? |
| Average inventory |
units |
| (b-2) | What is the total carrying cost? (Omit the “$” sign in your response.) |
| Total carrying cost |
$ |
| Assume an additional 70 units of inventory will be required as safety stock. |
| (c-1) | What will the new average inventory be? |
| Average inventory |
units |
| (c-2) | What will the new total carrying cost be? (Omit the “$” sign in your response.) |
| Total carrying cost |
$ |
