Calculate the eoq and calculate the reorder point

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Reference no: EM131251381

A popular item stocked by the Fair Deal Department Store has an annual demand of 600 units. The cost to purchase these units from the supplier is $20 per unit and $12 to prepare the purchase order.

The annual inventory holding cost is 20 percent of the purchase cost. The manager tries to maintain the probability of stockout at 5 percent or less. Lead time demand is uniform, between 30 and 70 (i.e., the probability of lead time is 1/41 .0244 for demand 30, 31, . . . , 70).

a. Calculate the EOQ.

b. Calculate the reorder point.

c. Calculate the safety stock.

d. If we purchase 80 units or more, the unit purchase cost is reduced to $19. Calculate the EOQ for this quantity discount case.

Reference no: EM131251381

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