Item X Is a standard item stocked in a company's inventory of component parts. Each year the firm, on a random basis, uses about 2,700 of item X, which costs $25 each. Storage costs, which include insurance and cost of capital, amount to $5 per unit of average inventory. Every time an order is placed for more of item X, it costs $20. a. Whenever item X is ordered, what should the order size be? Note: Round your answer to the nearest whole number. b. What is the annual cost for ordering item X? Note: Round your order quantity to the nearest whole number and your final answer to 2 decimal places

Practical Management Science
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Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
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Item X Is a standard item stocked in a company's inventory of component parts. Each year the firm, on a random basis, uses about 2,700 of item X, which costs $25 each. Storage costs, which include insurance and cost of capital, amount to $5 per unit of average inventory. Every time an order is placed for more of item X, it costs $20. a. Whenever item X is ordered, what should the order size be?

Note: Round your answer to the nearest whole number.

b. What is the annual cost for ordering item X?

Note: Round your order quantity to the nearest whole number and your final answer to 2 decimal places.

 

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