A company has decided to market its products more aggressively. Current sales are 30,000 units per year, and they are expected to increase by 50% next year. Carrying costs are estimated at $0.20 per unit, and order costs are estimated at $7.00. The firm wants to minimize its inventory costs.
Questions
1. What is the economic ordering quantity?
2. What is the optimal number of orders per month once the new sales level is reached?