This question will have you calculating 2 EOQ and ROP values and interpreting the results.  For both EOQ and ROP, give your final answer in full sock sets (ROUND UP to the next whole number).  The specific questions to answer are based in parts a-c.  Tips to solve the EOQ and ROP are given below in bullet points.

A). Calculate EOQ and ROP for FY2017 based on the FY2017 forecast value, using the forecast method you selected in Q2 (Use exponential smooth)

B). Calculate the EOQ and ROP based upon actual demand for FY2017

C). Using the responses from parts a & b, indicate what the implications are for inventory management costs in FY2017.  In other words, compare the total costs for both EOQ values and analyze what it shows you.

See additional tips below:

-Use a service level of 95% (z=1.65) when calculating the ROP

-Calculate average weekly demand () by dividing the forecast by 50 weeks

-For the variance in weekly demand, use the data provided in the table on page 2 of the case with the FY2017 forecast for all approaches.

-Remember that there is a difference between variance and standard deviation and how you apply these values in the ROP formula

-Annual Inventory management costs will include the following: Annual Holding Costs, Annual Ordering Costs, and Purchase Cost.

Year	Demand	Weighed Moving Average Forecast	Exponential Forecast
2016	20,000	17,000	17,200
2017	23,000	19,500	19,720
2018		22,400	22,672
		(0.8 x 23,000) + (0.2 x 20,000) = 22,400	(0.9 x 23,000) + [(1 - 0.9) x  19,720] = 22,672

*Cost per order = $350 * Holding cost per order= $5