The Cloth Centre sells fabrics to a wide range of industrial and consumer users. One of the
Question:
Annual demand for denim cloth........... 20,000 metres
Ordering cost per purchase order........... $160
Carrying cost per year.............. 20% of purchase costs
Safety-stock requirements........... None
Cost of denim cloth................ $8 per metre
The purchasing lead time is 2 weeks. The Cloth Centre is open 250 days a year (50 weeks for 5 days a week).
REQUIRED
1. Calculate the EOQ for denim cloth.
2. Calculate the number of orders that will be placed each year.
3. Calculate the reorder point for denim cloth.
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Related Book For
Cost Accounting A Managerial Emphasis
ISBN: 978-0133392883
6th Canadian edition
Authors: Horngren, Srikant Datar, George Foster, Madhav Rajan, Christ
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