A flower shop buys vases from its vendor utilizing the EOQ model. The store expects a demand of 200 vases per month, ass
Posted: Wed May 04, 2022 8:25 am
A flower shop buys vases from its vendor utilizing the EOQ
model. The store expects a demand of 200 vases per month, assume
the holding cost per vase per month will be 10% of the price of
purchase, and fixed cost is $12 per order. The flower shop buys
vases at $1.50 per vase. The vase supplier will offer all-unit
quantity discounts, that is if the order quantity for vases is at
least 400, the flower shop can purchase vases for $.75 per vase. If
the order quantity is at least 1000, then the flower shop can buy
vases for $.55 per vase.
1. What is the flower store's optimal order quantity?
2. Suppose we can expect an order lead time of 1/18 of
a year. Using what you found in question 1, what is the point of
reorder in terms of remaining inventory?
model. The store expects a demand of 200 vases per month, assume
the holding cost per vase per month will be 10% of the price of
purchase, and fixed cost is $12 per order. The flower shop buys
vases at $1.50 per vase. The vase supplier will offer all-unit
quantity discounts, that is if the order quantity for vases is at
least 400, the flower shop can purchase vases for $.75 per vase. If
the order quantity is at least 1000, then the flower shop can buy
vases for $.55 per vase.
1. What is the flower store's optimal order quantity?
2. Suppose we can expect an order lead time of 1/18 of
a year. Using what you found in question 1, what is the point of
reorder in terms of remaining inventory?