The new toilet has been test-marketed successfully and Home Depot estimated that sales would average...
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The new toilet has been test-marketed successfully and Home Depot estimated that sales would average 1,000 units per year. It would cost $100 to keep a unit in inventory for a year, and the fixed reordering cost would be $80. Home Depots cost would be $500 per unit. The following table shows the expected stockout costs
Help, please! I solve the first question but I am not confident in my answer.
What is Home Depots EOQ for the deluxe toilet units? Using the EOQ, what is the average inventory, number of orders per year, and the total annual cost of maintaining the inventory of deluxe toilet units?
The average lead-time demand is 10 units. The exhibit below shows how the expected annual stockout cost depends on the amount of safety stock. What is the optimal safety stock and reorder point? (Hint: Calculate the remaining three columns in the table to determine the least expensive alternative.) SAFETY STOCKS AND EXPECTED STOCKOUT COSTS
Reorder
Safety
Expected
Stockout
Reorder
Carrying
Ordering
Total
Point
Stock
Costs
Point
Cost
Cost
Cost
10
0
$350
20
12
2
290
22
14
4
255
24
16
6
225
26
18
8
210
28
20
10
200
30
22
12
192
32
24
14
186
34
26
16
182
36
28
18
180
38
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