Chris Froome is a purchasing agent for a firm that sell components for high performance bicycles. One of the most popular components is the TDF bicycle frame which has an annual demand of 1,750 units. The cost of each frame is $675 and the inventory carrying cost is estimated to be 18% of the cost of each frame. Chris has made a study of the costs involved in placing an order for any of the frames the firm stocks, and he has concluded that the average ordering cost of $73 per order. Furthermore, it takes about one week for an order to arrive from the supplier, and the TDF operates 50 weeks per year. a) What is the annual ordering cost?
b) What is the annual holding cost?
c) How many orders (on average) would be placed per year?
d) What is the average inventory?
e) What is the reorder point? f) What is the EOQ?

in 2001, dell computer became the world’s largest personal computer vendor, continuing to

gain market share and post profits in an industry struggling with slumping sales and billions of

dollars in losses. dell sells 90% of its pcs directly to the final customer, largely bypassing the

reseller channel that accounts for most of the world’s pc sales. this direct customer relationship

is the key to dell’s business model, and provides distinct advantages over the indirect sales

model. dell’s direct relationship with the customer allows it to tailor its offerings to customer

needs, offer add-on products and services, and use the internet to offer a variety of customer

services. in addition, dell’s pcs are built to customers’ specifications upon receipt of an order,

giving dell additional advantages over indirect pc vendors who must try to forecast demand and

ship products based on those forecasts. dell’s direct sales and build-to-order model has achieved

superior performance in the pc industry in terms of inventory turnover, reduced overhead, cash

conversion, and return on investment (kraemer, et al., 2000).

explanation:

answer; the nav calculated at the market close at 4: 00 pm new york time;