Parker Hi-Fi Systems, located in Wellesley, Massachusetts, a Boston suburb, assembles and sells the very finest home theater systems. The systems are assembled with components from the best manufacturers worldwide. Although most of the components are procured from wholesalers on the east coast, some critical items, such as LCD screens, come directly from their manufacturer. For instance, the LCD screens are shipped via air from Foxy, Ltd., in Taiwan, to Boston’s Logan airport, and the top- of- the- line speakers are purchased from the world- renowned U. S. manufacturer Boss.
What is the optimal order number of LCDs that should be placed in each order?
What is the optimal reorder point (ROP) for LCDs?
What cost savings will Parker realize if it implements an order plan based on EOQ?