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university of southern california Operations And Supply Chain Management Assignment Help - Alexis Company


Question - Alexis Company uses 800 units of a product per year on a continuous basis. The product has a fixed
cost of $50 per order, and its carrying cost is $2 per unit per year. It takes 5 days to receive a
shipment after an order is placed, and the firm wishes to hold 10 days’ usage in inventory as a safety
stock.
a. Calculate the EOQ.
b. Determine the average level of inventory. (Note: Use a 365-day year to calculate daily usage.)
c. Determine the reorder point.
d. Indicate which of the following variables change if the firm does not hold the safety stock: (1) order
cost, (2) carrying cost, (3) total inventory cost, (4) reorder point, (5) economic order quantity. Explain.

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