1. The Go - Pro Extreme is a retail outlet that deals exclusively with Go-Pro cameras. The manager is trying to decide on an inventory and reorder policy for the economic travel use of a Go -Pro camera. Each economic model Go-Pro camera costs $220 and demand is about 990 per year distributed evenly throughout the year. Reordering costs are $98 per order and holding costs are figured at 25% of the cost of the item. The shop is open 300 days a year (6 days a week and closed two weeks in January for New Years Holiday). Lead time is 50 working days. What is the optimal order quantity? *Enter the number only** *Do not use any words or symbols** *Round your answer to two decimal places only**

1. The Go - Pro Extreme is a retail outlet that deals exclusively with Go-Pro cameras. The manager is trying to decide on an inventory and reorder policy for the economic travel use of a Go -Pro camera. Each economic model Go-Pro camera costs $220 and demand is about 990 per year distributed evenly throughout the year. Reordering costs are $98 per order and holding costs are figured at 25% of the cost of the item. The shop is open 300 days a year (6 days a week and closed two weeks in January for New Years Holiday). Lead time is 50 working days. What is the optimal order quantity? *Enter the number only** *Do not use any words or symbols** *Round your answer to two decimal places only**

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints

Section: Chapter Questions

Problem 6E: Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The...

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Rugged Outfitters purchases one model of mountain bike at a wholesale cost of $520 per unit and resells it to end consumers. The annual demand for the company’s product is 49,000 units. Ordering costs are $500 per order and carrying costs are $100 per bike per year, including $40 in the opportunity cost of holding inventory. Q. Assume that when evaluating the manager, the company excludes the opportunity cost of carrying inventory. If the manager makes the EOQ decision excluding the opportunity cost of carrying inventory, the relevant carrying cost would be $60, not $100. How would this affect the EOQ amount and the actual annual relevant cost of ordering and carrying inventory?