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Additional EPQ Problems and Solutions

Additional EPQ Problems and Solutions - For EPQ(economic...

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For EPQ (economic production quantity) use the following formulas: EPQ = * p = production rate d = demand rate Imax = maximum Inventory EPQ Imax = Q(1-(d/p)) EPQ TC Problems 1. A store sells 30 decorated T-shirts a day for each of the 300 days a year it is open. The silk-screen shop across the street applies the decorations and delivers them to the store as they are finished at a rate of 60/day. If the cost of ordering is $10, each shirt is worth $20, and the inventory carrying cost percentage is 25%, what is the EPQ and the total cost of managing this inventory system? 2. A company is open for business 250 days each year. On days when it is open an average of 40 small rugs are sold. (a) If the cost of placing an order is $25, each rug is worth $35, and the cost of carrying inventory is 20%/year, what is the EOQ? (b) What is the total annual cost of managing inventory? (c) What is the maximum inventory level? (d) What is the average inventory investment?
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