NEED ANSWER ASAP ANSWER THROUGHLY COPY AND PASTE ANSWER NOT ATTACHMENT 20-18 EOQ

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NEED ANSWER ASAP

ANSWER THROUGHLY

COPY AND PASTE ANSWER NOT ATTACHMENT

20-18 EOQ for a retailer. The Denim World sells fabrics to a wide range of industrial and consumer users. One of the products it carries is denim cloth, used in the manufacture of jeans and carrying bags. The supplier for the denim cloth pays all incoming freight. No incoming inspection of the denim is necessary because the supplier has a track record of delivering high-quality merchandise. The purchasing officer of the Denim World has collected the following information Annual demand for denim cloth 26,400 yards $165 Ordering cost per purchase order Carrying cost per year Safety-stock requirements 20% of purchase costs None Cost of denim cloth S9 per yard The purchasing lead time is 2 weeks. The Denim World is open 250 days a year (50 weeks for 5 days a week)

Explanation / Answer

Question 1.

D = 26,400 yards per year,

P = $165,

C = 20% ´ $9 = $ 1.80 per yard per year

Economic Order Quantity   = Square Root of { ( 2 x D x P ) /C ]

                                                = Square Root of { ( 2 x 26400 x 165 ) / 1.80]

                                                = Square Root of ( 48,40,000 )

Economic Order Quantity = 2200 Yards

Question 2

Number of orders per year = Demand / EOQ

                                                = 26400 / 2200

                                                = 12 orders per year

Question 3

Demand each working day = 26,400 / 250 =105.60 yards per day

= 528 yards per week (105.60 × 5 days per week)

Purchasing lead time = 2 weeks

Reorder point = 528 yards per week x 2 weeks = 1,056 yards

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