Question 3 for reference:

Barbara Brown is the purchasing agent for Central Valve Company, which sells industrial valves and fluid-control devices. One of their most popular valves is the Western, which has an annual demand of 4,000 units. The cost of each valve is $90.00, and the inventory carrying cost is estimated to be 10% of the cost of each valve. Barbara has made a study of the costs involved in placing an order for any of the valves that Central Valve stocks, and she has concluded that the average ordering cost is $25.00 per order. Furthermore, it takes about 8 days for an order to arrive from the supplier. During this time, the demand per week for Central valves is approximately 80.

Question to be answered: The EOQ is said to be a robust model. It is not affected by small changes in the key parameters of its models. These parameters are Demand, Holding cost, and ordering cost. Using the information from question 3 and allowing for changes of + 25% in these key parameters, show that the EOQ model is a robust model.