Data table Expected annual demand for Galaxy jerseys Ordering cost per purchase order Carrying cost per year 14,000 $112 $10 per jersey Each jersey costs ES $40 and sells for $80. The $10 carrying cost per jersey per year consists of the required return on investment of $6.80 (17% x $40 purchase price) plus $3.20 in relevant insurance, handling, and storage costs. The purchasing lead time is 5 days. ES is open 365
Data table Expected annual demand for Galaxy jerseys Ordering cost per purchase order Carrying cost per year 14,000 $112 $10 per jersey Each jersey costs ES $40 and sells for $80. The $10 carrying cost per jersey per year consists of the required return on investment of $6.80 (17% x $40 purchase price) plus $3.20 in relevant insurance, handling, and storage costs. The purchasing lead time is 5 days. ES is open 365
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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
Transcribed Image Text:Data table
Expected annual demand for Galaxy jerseys
Ordering cost per purchase order
Carrying cost per year
Show Transcribed Text
J
Each jersey costs ES $40 and sells for $80. The $10 carrying cost per jersey per year consists
of the required return on investment of $6.80 (17% x $40 purchase price) plus $3.20 in relevant
insurance, handling, and storage costs. The purchasing lead time is 5 days. ES is open 365
days a year.
Requirements
J
14,000
$112
$10 per jersey
Ć
1. Calculate the EOQ.
2. Calculate the number of orders that will be placed each year.
3. Calculate the reorder point.

Transcribed Image Text:Excel Sports (ES) operates a megastore featuring sports merchandise. It uses an EOQ decision model to make inventory decisions. It is now considering inventory decisions for its Los Angeles Galaxy soccer jerseys product
line. This is a highly popular item. Data for 2020 are as follows:
(Click the icon to view the data.)
Read the requirements.
Requirement 1. Calculate the EOQ.
Begin by selecting the formula used to calculate EOQ. (D = Demand in units for one year, P = Ordering cost per purchase order, C = Carrying cost of one unit in stock, Q = Any order quantity.)
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