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What is the EOQ? What is the average inventory? How many orders should be placed each year?

What is the EOQ? What is the average inventory? How many orders should be placed each year?

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Fruitcake Specialists sells 36,000 fruit cakes annually. Annual carrying costs are P5 per fruit cake and the ordering costs are P100 per order. The firm has decided to maintain a safety stock of one month's sales or 3,000 fruit cakes. The delivery time per order is 5 days. Assume a 365-day a year.

  1. What is the EOQ?
  2. What is the average inventory?
  3. How many orders should be placed each year?
  4. What is the total inventory cost?
  5. What is the re-order point?
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