Problem1. The Trektronics store begins each month with 740 phases in the stock. This stock is depleted each month as well as reordered. The carrying cost per phase is $26 each year and the fixed order cost is $340.
Requirement 1:
What is total carrying cost?
Requirement 2:
What is restocking cost?
Requirement 3:
Calculate economic order quantity.
Requirement 4:
Calculate optimal number of orders per year.
Requirement 5:
Should the company increase or decrease its order size? Could you describe how to find out these?