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Economic Order Quantity Model

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The Western Jeans Company purchases denim from Cumberland Textile Mills. The Western Jeans Company uses 35,000 yards of denim per year to make jeans. The cost of ordering denim from the textile company is $500 per order. It costs Western $0.35 per yard annually to hold a yard of denim in inventory. determine the optimal number of yards of denim the Western Jeans Company should order, the minimum total annual inventory cost, the optimal number of orders per year, and the optimal time between orders.

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Solution Preview

Given the following information:
Demand per year r = 35000 yards per year
Ordering cost C3 = $500 / ...

Solution Summary

Economic Order Quantity Model is applied.