Chapter 20, Problem 20.31P

1.

To determine

Economic Order Quantity (EOQ):

Economic order quantity is the quantity of order that is purchased from supplier at a time, the EOQ aim is to reduce the carrying and ordering cost of inventory. EOQ is also referred as the optimum level of lot size.

Safety Stock:

Safety stock is that type of stock which a company always store to meet the uncertainties seen in the future. The company always maintains this type of stock so that the demand of customer will be fulfilled and company will retain the customer.

To calculate: The optimum number of motors per order using EOQ model.

2.

To determine

To compute: The reorder point

3.

To determine

To compute: The safety stock also explains the effect of safety stock on reorder point and on reorder quantity.