Taizhou Products Uses 800 Units of a Product Per Year

question 155

Essay

Taizhou Products uses 800 units of a product per year on a continuous basis. The product has carrying costs of $50 per unit per year and order costs of $300 per order. It takes 30 days to receive a shipment after an order is placed and the firm requires a safety stock of 5 days usage in inventory.
(a) Calculate the economic order quantity (EOQ).
(b) Determine the reorder point.

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Definitions:

Foreign-Currency Exchange

The process of exchanging one country's currency for another's, often determined by market rates.

Budget Deficit

The situation in which a government's expenditures exceed its revenue, resulting in the need to borrow money or increase taxes.

Loanable Funds

Describes the market where savers supply funds for loans to borrowers, influencing interest rates and investment.

Government Budget Deficit

A government budget deficit occurs when a government spends more money than it receives in revenue over a given period.