EOQ Fixed Order Quantity with Certainty

1. In the chart below clearly identify and label (a) the replenishment order quantity, (b) re-order point, and (c) the demand during replenishment lead-time. 2. Assume: Annual demand = 64,000 Value of 1 unit = $320 Carrying cost per $ of inventory = 25% Cost of placing an order = $400 Replenishment lead-time = 12 days Assume 365 days in a year (a) What is the replenishment quantity (to the nearest whole number)? (b) What is the re-order point? (c) What is the total annual cost? TAC = QS + AR Q = √ 2RA 2 Q S Read the following mini-case for questions 3-6. Last year Rick Palmer retired from playing gigs and opened a guitar store in his home town of Hobbs, New Mexico. By leveraging his website, sales have grown to a current level of 1,800 per month which comes out at 21,600 units annually. Rick estimates it costs him $8 each time he places an order with his supplier. He would like to grow his business but worries about the $15 cost his assistant manager says it costs to store each guitar. 3. In the case above, what is the value of R? a) 8 b) 15 c) 1,800 d) 21,600 4. In the case above, what is the value of A? a) 8 b) 15 c) 1,800 d) 21,600 5. In the case above, what is the value of S? a) 8 b) 15 c) 1,800 d) 21,600 6. In the case above, what is the value of Q (to the nearest whole number)? a) 43 b) 152 c) 191 d) 1,800