Unformatted text preview: Thus, the net effect is that Webster would save $10,000 - $4,800 = $5,200 if it takes the discount, and hence it should do so. i. For many firms, inventory usage is not uniform throughout the year, but, rather, follows some seasonal pattern. Can the EOQ model be used in this situation? If so, how? Answer: The EOQ model can still be used if there are seasonal variations in usage, but it must be applied to shorter periods during which usage is approximately constant. For example, assume that the usage rate is constant, but different, during the summer and winter periods. The EOQ model could be applied separately, using the appropriate annual usage rate, to each period, and during the transitional fall and spring seasons inventories would be either run down or built up with special seasonal orders....
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- Spring '08
- $5,000, Season, $1,000, $4,800, $5,200