40,700 yards Annual demand for denim cloth Ordering cost per purchase order Carrying cost per year Safety-stock requirements Cost of denim cloth $185 10% of purchase costs None $11 per yard The purchasing lead time is 2 weeks. The Fabric World is open 220 days a year (44 weeks for 5 days a week). 1. Calculate the E0Q for denim cloth. 2. Calculate the number of orders that will be placed each year. Required 3. Calculate the reorder point for denim cloth.
40,700 yards Annual demand for denim cloth Ordering cost per purchase order Carrying cost per year Safety-stock requirements Cost of denim cloth $185 10% of purchase costs None $11 per yard The purchasing lead time is 2 weeks. The Fabric World is open 220 days a year (44 weeks for 5 days a week). 1. Calculate the E0Q for denim cloth. 2. Calculate the number of orders that will be placed each year. Required 3. Calculate the reorder point for denim cloth.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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EOQ for a retailer. The Fabric World sells fabrics to a wide range of industrial and consumer users. One of the products it carries is denim cloth, used in the manufacture of jeans and carrying bags. The supplier for the denim cloth pays all incoming freight. No incoming inspection of the denim is necessary because the supplier has a track record of delivering high-quality merchandise. The purchasing officer of the Fabric World has collected the following information:
Transcribed Image Text:40,700 yards
Annual demand for denim cloth
Ordering cost per purchase order
Carrying cost per year
Safety-stock requirements
Cost of denim cloth
$185
10% of purchase costs
None
$11 per yard
The purchasing lead time is 2 weeks. The Fabric World is open 220 days a year (44 weeks for 5 days a
week).
1. Calculate the E0Q for denim cloth.
2. Calculate the number of orders that will be placed each year.
Required
3. Calculate the reorder point for denim cloth.
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