Photochemical reactor modeling: a case-study problem. Although radiation is important in heat transfer, an analogous model can be used in the design of photochemical reactors. The modeling of these reactors….
What is the firm’s reorder point for the item of inventory being evaluated?
Vargas enterprises wish to determine the economic order quantity (EOQ) for a critical and expensive inventory item that is used in large amounts at a relatively constant rate throughout the year. The firm uses 450,000 units of the item annually, has order costs of $375 per order, and its carrying costs associated with this item are $28 per unit per year. The firm plans to hold safety stock of the item equal to 5 days of usage, and it estimates that it takes 12 days to receive an order of the item once placed. Assume a 365-day year. What is the firm’s reorder point for the item of inventory being evaluated? (Hint: Be sure to include the safety stock.)