Kari-Klr AS buys and sells fabrics to a wide range of industrial and consumer users. One of

Kari-Klær AS buys and sells fabrics to a wide range of industrial and consumer users. One of the products it carries is denim cloth, used in the manufacture of jeans and carrying bags. The supplier for the denim cloth pays all incoming freight. No incoming inspection of the denim is necessary because the supplier has a track record of delivering high-quality merchandise. The purchasing officer of Kari-Klær has collected the following information:

The purchasing lead time is two weeks. Kari-Klær 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.

Transcribed Image Text:

Annual demand for denim cloth Ordering costs per purchase order Carrying costs per year Safety stock requirements Cost of denim cloth 20 000 metres 160 20% of purchase cost None 8 per metre