Economic order quantity and total cost

Reference no: EM13292100

Rock-n-Sake Sushi is sushi restaurant in Baton Rouge, LA. Demand for their most popular role, the LSU role, is 28,300 roles per year. They pay $4.25 for each role, with carrying costs of 65 percent. It costs $2 to place an order. Assume that demand occurs at a constant rate, shortages are not allowed, and there is a 4-day lead-time. Assume 365 days a year. Please use an EOQ model to determine the

a. Economic Order Quantity?

b. What will the total cost be ?

c. How many orders will Rock-n-Sake place per year if they use the EOQ value computed above?

d. By how much would his annual inventory costs (ordering + carrying) if Rock-n-Saki used an inventory order quantity of 327, instead of the EOQ?

e. What is the reorder point with the original EQQ?

Reference no: EM13292100

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