Rex manufacturing purchases a printed circuit board for use in its automatic, computerized, robot bartender. The manufacturing facility has placed the following monthly demands on purchased goods inventory during the past year

Assume that the demand follows a Nonnal distribution, and to be representative of what will occur in the future. Rex estimates that a fixed cost of $300 is incurred each time an order is placed for the boards, and that the inventory holding cost is about 20% per year of the value of inventory. Each board has an estimated value of $192 at the point of storage. The leadtime on purchase orders is (1/5) month.
(a) What is the EOQ?

Transcribed Image Text:

Month Demand 205 3 193 4 10 11 179 214 12 197 220 202 226 179 202 197 186