A company annually consumes 10,000 units of Part C. The carrying cost of this part is $2 per year and the ordering costs are $100 . The company uses an order quantity of 500 units. If the company operates 200 days per year, and the lead time for ordering Part C is 5 days, what is the order point?
a. 250 units
b. 1,000 units
c. 500 units
d. 2,000 units
A
Order point = Daily use * Lead time
= (10,000/200) * 5
= 250 units
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