Can you help with letter b? For letter a I got 93 bottles idk if thats...
Can you help with letter b? For letter a I got 93 bottles idk if thats correct but not sure how to do b? And I know S= R(l+T) where l is lead time which is the 3 days
The manager of store Z asks you to help in determining the optimal ordering policy for Truck Stop Honey. The demand for this beer is 35 bottles per day. The store pays a unit cost of $3.50 per bottle and a fixed ordering cost of $130 per order. The annual unit holding cost of inventory is estimated to be 30% of the unit cost of each bottle. The store operates 280 days a year.
a. Determine the Economic Order Quantity (EOQ).
b. Compute the reorder point (ROP) assuming that the order lead time is 3 days.
Homework Answers
A. EOQ = SQRT(2 * DEMAND * ORDERING COST / HOLDING COST)
Annual demand = 35 * 280 = 9800
Holding cost = 30% of $3.5
EOQ = SQRT(2 * 9800 * 130 / 1.05) = 1557.78
B. ROP = daily demand * Lead time = 35 * 3 = 105
In EOQ question, when safety stock is not mentioned, you can calculate ROP by using the above formula.
Comment if you have any problem.
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Can you help with letter b? For letter a I got 93 bottles idk if
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