Hayes Electronics stocks and sells a particular brand of microcomputer.
It costs the firm $450 each time it places an order with the manufacturer
for the microcomputers. The cost of carrying one microcomputer in
inventory for a year is $170. The store manager estimates that total
annual demand for the computers will be 1,200 units, with a constant
demand rate throughout the year. Orders are received within minutes after
placement from a local warehouse maintained by the manufacturer. The
store policy is to never have stockouts of the microcomputers. The store
is open for business every day of the year except Christmas Day.
Determine the following:
- Optimal order quantity per order
- Minimum total annual inventory costs
- The optimum number of orders per year
- The optimum time between orders (in working days)