A trading company buys and sells 10000 bottles of pain-balm every year. The company's cost of placing an order of pain-balm is $100. The holding cost per bottle on inventory is $0.30.
To determine the optimum order quantity and inventory cycle time for the pain-balm bottles.
How many orders should be placed each year?
Ans:-
1)
The optimum order quantity is the ratio between the cost of placing an order and the holding cost
bottles;
inventory cycle time is the ratio between the optimum order quantity and the quantity of the bottles
year (or days).
2) Number of orders is the inverse of the inventory cycle time
orders per year.
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