Operations Management: Homework Assignment $4$

Due on $11$:$59$pm$,$ April ${29}^{th},2024$

Q$5.$ A birdfeeder is one of the top$-$selling items at the Museum of Nature's gift shop. Louise, the museum's manager, estimates that weekly sales to be $20$ birdfeeders. The purchase cost of bindfeeders is $$16$ per unit and Louise estimates that it costs $25\%f$ an item's value to hold one unit in inventory for a year. The gift shop is open for $48$ weeks per year. The cost of placing an order is estimated to be $$120$ per order and the shipments are carried by the birdfeeder manufacturer. According to the current inventory policy, Louise is placing the same order every four months, whenever the inventory level hits zero $[$Assume: $1$ year $=12$ months$].$

a$.$ What is the total annual cost of this current inventory policy?

b$.$ What is the economic order quantity $($EOQ$)$ for Louise to order?