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Hi I have one question when working out the current ordering policy cost. We are told that the annual demand is 625,000, and there are 50 weeks in the year but when working out the ordering cost why do we not work it out using the assumption they place an order once a week? Instead they have used 625,000/100,000 (which is the number of units when the inventory level falls to 35,000.) Thank you
But the question specifically says that they currently order 100,000 units each time. We cannot simply assume that they order every week 🙂
Have you watched my free lectures on inventory control??
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