A firm has been in in the attractive situation of being able to obtain immediate delivery of an item it stocks for retail sale. The firm had therefore not bothered to order the item in any systematic way. However, the firm’s supplier has just indicated that it is going to be closing its local warehouse and will be satisfying all orders directly out of a national warehouse, which will result in a five-day lead time. The various costs associated with making an order for the item stocked are approximately $30 per order. The costs of carrying the item in inventory amount to approximately $20 per unit per year (primarily direct storage costs and foregone profit on investment in inventory). Demand for the item is reasonably constant over time and the forecast is for 19,200 units per year.
How many orders, on average, would be placed per year?