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A wholesale distributor stocks and sells lowflow toilets to contractors for use in commercial office buildings.The estimated annual demand for the toilets is 5,475 units. Theestimated average demand per day is 15 units. The purchase costfrom the toilet manufacturer is $125.00 per unit. The lead time fora new order is 3 days. The ordering cost is $100.00 per order. Theaverage holding cost per unit per year is $2.50. The distributorhas traditionally ordered 250 units each time they placed anorder.

What is the average number of units in inventory based uponordering 250 units each time an order is placed?

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Related questions

Johnny of the Job (JOJ) portable toilets must purchase new portable toilets that will be rented to construction companies for job site use. The toilet model the company is considering cost $325 per unit. The company plans to purchase 50 toilets. Each month the service and upkeep for the toilets is estimated to cost $8.75 per unit. Every 6 months the toilets must undergo cleaning and sanitizing that is contracted to cost $250 for all 50 toilets. The cleaning and sanitizing must also be performed before the company can dispose of the units, which will have a salvage value of $50 per toilet. JOJ wishes to make $5 per unit in addition to covering all costs. If the MARR for JOJ is 6%, how much should be charged (to the nearest dollar) per toilet per month for rental? Assume that all toilets are rented and can be used for 2 years.

A wholesale distributor of lenses and frames has been seeking tominimize its inventory costs and is planning to apply the economicorder quantity model to its main product, lens blanks. The data inthe next column are available for the next year.
Demand 1,000,000 units
Average unitcosts $20.00
Cost ofordering $72.00 per order
Unit carryingcosts 5% of average per unit cost
Management believes it can reduce the cost of ordering to $50.00 byimplementing an online ordering system with the lensmanufacturer.

If management does not implement the online ordering system, assumethat its EOQ will be 12,000 units.

If, however, management decides to implement the online orderingsystem, this will change the economic order quantity and save thecompany ordering costs by what amount?
Increase (Decrease) inEOQ Order Cost Savings (Expenditures) for EOQChange

2,000units $(1,000)
600units $(13,200)
(2,000)units $1,000
1,100units $22,000

RajDee Furniture Company (RFC) buys and sells office furniture.The company buys chairs from a manufacturer for $40 per unit. Ordercosts are $200 per order and there is a lead time of 10 days foreach order to arrive from the manufacturer to RFC warehouse.Inventory carrying cost for RFC is 10%. Average yearly demand forthe chairs is 40,000 units. Answer the following questions,assuming there is no uncertainty at all about the demand or thelead time.


7) How many units should RFC order each time?
8) What would average inventory be if RFC orders this quantityevery time?
9) If average lead time went up from 10 to 15 days, what willhappen to EOQ?

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