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Evans Company Has the Following Information ADetermine the Economic Order Quantity for Evans

question 62

Essay

Evans Company has the following information:
 Annual demand 4,000 units  Order size 1,000 units  Ordering cost per order $500 Carrying costs per unit for one year $50 Lead time (maximum 20 days) 10 days  Maximum daily use 25 units  Work year 250 days \begin{array}{ll}\text { Annual demand } & 4,000 \text { units } \\\text { Order size } & 1,000 \text { units } \\\text { Ordering cost per order } & \$ 500 \\\text { Carrying costs per unit for one year } & \$ 50 \\\text { Lead time (maximum 20 days) } & 10 \text { days } \\\text { Maximum daily use } & 25 \text { units } \\\text { Work year } & 250 \text { days }\end{array}
a.Determine the economic order quantity for Evans.
b.What is the annual savings to Evans Company if it is to change from an order size of 1,000 to the economic order quantity?
c.What is the reorder point?
d.What is the safety stock needed to prevent stockouts?

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