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The Wheeling Pottery Store begins each month with 1200 pots in stock. This stock is depleted each month and reordered. If the carrying cost per pot is $8 per year and the fixed order cost is $90, what is the total carrying cost?
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What is the restocking cost? Should Wheeling increase or decrease its order size?
Describe an optimal inventory policy for Wheeling in terms of order size and order frequency.
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Solution Preview
Carrying Cost (H)= $8
Ordering Cost (S)= $90
Batch Size (Q) = 1200
Total Carrying Cost = Q/2*H
= 1200/2 * 8= $4800.
Annual Restocking Cost = S* No of …
