Big Toy, Inc. annually sells 115,000 units of Big Blobs. Currently, inventory is financed through the use of commercial bank loans. Big Toy pays $11.80 per Big Blob. The cost of carrying this inventory is $3.40 per unit while the cost of placing an order involves expenses of $500 per order. Since Big Blobs are imported, delivery is generally 25 days but may be as long as 30 days. To manage inventory more efficiently, the management of Big Toy, Inc. has decided to use the EOQ model plus a safety stock to determine inventory levels. What is the economic order quantity? Round your answer to the nearest whole number. units Today is January 1 and the current level of inventory is 11,500 units; when should the first order be placed based on the economic order quantity? Assume 365 days in a year. Round your answer to the nearest whole number. The first order based on the EOQ model would be placed on the th day. Management always wants sufficient Big Blobs so that they never are out of stock. If management considers late deliveries to be the prime reason for being out of stock, what should be the safety stock? Round the number of units sold per day in your intermediate calculations to the nearest whole number. Round your answer to the nearest whole number. units According to the above analysis, what are the maximum inventory, the minimum inventory, and the average inventory? Use the rounded values of the EOQ and the safety stock in your calculations. Round your answers up to the nearest whole number. Maximum inventory: units Minimum inventory: units Average inventory: units If sales of Big Blobs double, will the average inventory also double? If sales double, the average inventory double.
Big Toy, Inc. annually sells 115,000 units of Big Blobs. Currently, inventory is financed through the use of commercial bank loans. Big Toy pays $11.80 per Big Blob. The cost of carrying this inventory is $3.40 per unit while the cost of placing an order involves expenses of $500 per order. Since Big Blobs are imported, delivery is generally 25 days but may be as long as 30 days. To manage inventory more efficiently, the management of Big Toy, Inc. has decided to use the EOQ model plus a safety stock to determine inventory levels.
-
What is the economic order quantity? Round your answer to the nearest whole number.
units
-
Today is January 1 and the current level of inventory is 11,500 units; when should the first order be placed based on the economic order quantity? Assume 365 days in a year. Round your answer to the nearest whole number.
The first order based on the EOQ model would be placed on the th day.
-
Management always wants sufficient Big Blobs so that they never are out of stock. If management considers late deliveries to be the prime reason for being out of stock, what should be the safety stock? Round the number of units sold per day in your intermediate calculations to the nearest whole number. Round your answer to the nearest whole number.
units
-
According to the above analysis, what are the maximum inventory, the minimum inventory, and the average inventory? Use the rounded values of the EOQ and the safety stock in your calculations. Round your answers up to the nearest whole number.
Maximum inventory: units
Minimum inventory: units
Average inventory: units
-
If sales of Big Blobs double, will the average inventory also double?
If sales double, the average inventory double.
Step by step
Solved in 2 steps
