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Length of Time to Receive an Order and Maximum Inventory Level

Question

Discount Carpets manufactures Caskade Carpet, which it sells in its adjoining showroom store near the interstate. Estimated annual demand is 20,000 yards of carpet with an annual carrying/holding cost of $2.75 per yard. The manufacturing facility operates the same 360 days the store is open and produces 400 yards of carpet per day. The cost of setting up the manufacturing process for a production run is $720.

1. Determine the optimal order size.

2. What is the total inventory cost?

3. What is the length of time to receive an order?

4. What is the maximum inventory level?

Summary

This question belongs to operations management and discusses about POQ and optimal order size of Discount Carpets.

Word count: NA

 

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