annual demand

inventory carrying cost

ordering cost

EOQ

No of times

Ordering cost

Carrying cost

Total inventory related cost

Ordering cost
Carrying cost
Total inventory related cost
 360,000
0.25
72

14,400

Annual Demand / EOQ

25 times

Ordering cost x Number of times to order

1,800

=(EOQ / 2)*Carrying cost

1,800

carrying cost + ordering cost

3,600

Previous policy @ 10,000

2,592 36
1,250 5000
3,842

242
Average daily usage 100
Normal lead time 5
Maximum lead time 8

Safety stock Maximum Lead time - Normal lead time ) x Average usage
300

Reorder point Maximum Lead time x Average usage

800

Reorder point Normal lead time x Average usage

500

Safety stock zero

Day Daily usage Balance
1 500 -100 400
2 400 -100 300
3 300 -100 200
4 200 -100 100
5 100 -100 0
6 300
7 200
8 100
Reorder point Normal daily usage x lead time
14,000

Safety stock Maximum daily usage - Normal daily usage ) x lead time
7000

Reorder point Maximum usage x lead time

21000