Super Shirts (SS) operates a megastore featuring sports merchandise. It uses an EOQ decision model to make inventory decisions. SS is now considering inventory decisions for its Los Angeles Galaxy jackets product line. This is a highly popular item. Data for 2013 are:
Expected annual demand for Galaxy jackets ...... 9,000
Ordering cost per purchase order ......... $ 250
Carrying cost per year ............. $ 8 per jersey
Each jersey costs Super Shirts $ 50 and sells for $ 100. The $ 8 carrying cost per jersey per year comprises the required return on investment of $ 5.00 (10% * $ 50 purchase price) plus $ 3.00 in relevant insurance, handling, and theft- related costs. The purchasing lead time is 6 days. SS is open 365 days a year.

1. Calculate the EOQ.
2. Calculate the number of orders that will be placed each year.
3. Calculate the reorder point.

  • CreatedJanuary 15, 2015
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