Suppose the price of gasoline decreases from $4.20 to $2.00, and in response quantity demanded increases from 10600 to 11200. Us
1 answer:
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Answer:
a. 32 refrigerators
b. 29 refrigerators
Explanation:
a. The computation of the economic order quantity is shown below:
= 32 refrigerators
The carrying cost is come from
= $500 × 20%
= $100
b. And, the reorder point is
= Annual demand ÷ total number of days in a year × lead time + service level × Standard deviation during lead time
= 500 ÷ 365 days × 7 days + 1.90 × 10
= 29 refrigerators