Demand for a popular athletic shoe is nearly constant at 800 pairs per week for a regional division of a national retailer. The cost per pair is $54. It costs $72 to place an order, and annual holding costs are charged at 22% of the cost per unit. The lead time is two weeks.
a. What is the EOQ?
b. What is the reorder point?
c. What is the cycle time?
d. What is the total annual cost?
Dear Student- I have included my response below.
a. Q* = 710.1
b. r = 1600
c. T = 710.1/800 ...
The basic formula for EOQ is applied to this case.