Question

Hasty Manufacturing orders 4,800 units annually. They order 4 times a year. They hold 112 units in safety stock. On average, the number of units Hasty Manufacturing holds is

Answer 1

Answer:

712 Units

Explanation:

Given

Order Quantity = 4800 units

Safety Stock = 112 units

Since Hasty Manufacturing make orders 4 times in a year, then Safety Stock = 4 * 112 = 448

Average inventory = ½(Order Quantity) + Safety Stock

Average inventory = ½ * 4800 + 448

Average Inventory = 2400 + 448

Average Inventory = 2848 for 4 Orders per annum

Also, they make order 4 times a year.

So, the Average Inventory per order = 2848/4

So, Average Inventory = 712