A local furniture store is examining its inventory policy and considering using an economic order quantity (EOQ)
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Question:
A local furniture store is examining its inventory policy and considering using an economic order quantity (EOQ) approach for a popular table set that they have had difficulty keeping in stock. They haw the following information about the set:
Annual demand = 5000 sets
Current order quantity = 750
Carrying cost - $2.00/unit/year
Order cost = $450
- What is the current total annual cost?
- What is the economic order quantity?
- What is the total annual cost at the EOQ?
- If the store operates in 250 days during the year, what is the reorder point assuming there are no safety stocks?
Related Book For
Finance Applications and Theory
ISBN: 978-0077861681
3rd edition
Authors: Marcia Cornett, Troy Adair
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