Questions
SP25-BL-BUS-P481-5624 12. EOQ and EPQ
Numerical
If the demand for boots is 12,000 boots per year, and the EOQ for a retailer turns out to be 2,400 boots per order, what is the average amount of cycle inventory held by the retailer? Answer: ____ boots.
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In inventory management, cycle inventory refers to the portion of inventory that fluctuates between replenishments; it is the amount on hand during the middle of an order cycl......Login to view full explanationLog in for full answers
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Vilas County Hospital consumed 400 boxes of bandages per week last year. The price of bandages was $80 per box, and the hospital operates 52 weeks per year. The cost of processing an order was $64, and the cost of holding one box throughout a full year was 20% of the value of the material. Last year the hospital ordered bandages, on average, once every two weeks, each time ordering 800 boxes. What extra cost did the hospital incur that could have been avoided if the EOQ concept had been applied?
EOQ should be used if you use a make-to-order strategy and the customer specifies that the entire order be delivered in one shipment.
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