The consulting agency must better plan inventory needs for their new water/wastewater facility. When the...
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The consulting agency must better plan inventory needs for their new water/wastewater facility. When the populations need clean water, and the facility does not have the necessary materials to provide it. It must shut down . water tests are frequently conducted, and test kits are purchased to support critical decision on chemical use and equipment adjustment. For the past year's data, the average water test kit use was 985 per month. Additionally, the consulting agency calculates the following costs from the past year's performance:
Unit Cost per Test Kit = $210
Ordering Costs (buyer, transportation, receiving, other) per lot = $95
Inventory Holding Costs per year as a faction of unit cost (capital, obsolescence, handling, occupancy, other) = 25%
Using the Economic Order Quantity model, what is the optimal order size?
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