Question

Problem 17-16 Safety Stocks and Order Points (LO3] Saché, Inc., expects to sell 1,540 of its designer suits every week. The store is open seven days a week and expects to sell the same number of suits every day. The company has an EOQ of 1,340 suits and a safety stock of 220 suits. Once an order is placed, it takes three days for Saché to get the suits in. How many orders does the company place per year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Orders per yearſ times Assume that it is Monday morning before the store opens, and a shipment of suits has just arrived. When will Saché place its next order? When will Sache place its next order?

Answer 1

Number of suits sold per week= 1540

Number weeks in the year = 52

Total number of suits sold per year = 52× 1540= 80080

EOQ=1340

Number of order per year= total suits sold per year / EOQ

Number of order per year = 80080/1340= 59.76 or 59.8 (rounded up)

Once a order placed it takes three days for sache to get it's suits, Monday morning a shipment of suits has arrived before the store open which means Friday last order placed because of three days delay.

So next order will be on Thursday. Approximately 6 days between each order.

Next order placed on =365 days / 59.8= 6.10 days