Exercise_20-27_Solution

Exercise_20-27_Solution - 20-27 (30 min.) EOQ, uncertainty,...

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Unformatted text preview: 20-27 (30 min.) EOQ, uncertainty, safety stock, reorder point. 1. EOQ = 2 DP 2 × 120,000 × $250 = C $2.40 = 5,000 pairs of shoes 2. Weekly demand = Monthly demand ÷ 4 = 10,000 ÷ 4 = 2,500 pairs of shoes per week Purchasing lead time = 1 week Reorder point = 2,500 pairs of shoes per week × 1 week = 2,500 pairs of shoes 3. Safety stock = 20% ×10,000 = 2,000 pairs of shoes Reorder point = Weekly demand + Safety stock = 2,500 + 2,000 = 4,500 pairs of shoes EOQ = 5,000 pairs of shoes (since neither annual demand, ordering cost, nor carrying cost have changed, the EOQ will not change). ...
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