EOQ for a retailer. The Cloth Center 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 Cloth Center has collected the following information: Annual demand for denim cloth 20,000 yards Ordering cost per purchase order P160 Carrying cost per year 20% of purchase costs Safety-stock requirements None Cost of denim cloth P8 per year The purchasing lead time is 2 weeks. The Cloth Center is open 250 days a year (50 weeks for 5 days a week). 1. Calculate the EOQ for denim cloth. 2. Calculate the number of orders that will be placed each year 3. Calculate the reorder point for denimcloth.
EOQ for a retailer. The Cloth Center 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 Cloth Center has collected the following information:
Annual demand for denim cloth 20,000 yards
Ordering cost per purchase order P160
Carrying cost per year 20% of purchase costs
Safety-stock requirements None
Cost of denim cloth P8 per year
The purchasing lead time is 2 weeks. The Cloth Center is open 250 days a year (50 weeks for 5 days a week).
1. Calculate the EOQ for denim cloth.
2. Calculate the number of orders that will be placed each year
3. Calculate the reorder point for denimcloth.
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