11

1. Scenario: The president of the bicycle business has recently heard about the EOQ model and is interested in learning whether or not using this model would allow the company to reduce its annual costs by optimizing the number of orders placed each year and the number of bicycles purchased in each order. The estimated annual demand for the bicycles, estimated average demand per day, purchase cost from the bicycle manufacturer per unit, lead time for a new order, ordering cost per order and average holding cost per unit per year remain the same as stated in the scenario for the current ordering model. Based upon using the EOQ model (with instantaneous receipt):

   Question 11: What is the economic order quantity (EOQ) that will minimize inventory costs?

   64.64

   75.35

   78.31

   78.97

Question 12

1. Question 12:Refer to the data in the Question 11.How many orders per year will be necessary based upon using the EOQ?

   19.96

   16.59

   16.78

   17.56

Question 13

1. Question 13:Refer to the data in the Question 11.What is the average number of units in inventory based upon ordering using the EOQ?

   37.67

   39.15

   39.48

   32.32

Question 14

1. Question 14:Refer to the data in the Question 11.What is the average dollar value of inventory based upon ordering using the EOQ? (Rounded to the nearest dollar)

   $23,108

   $25,806

   $28,033

   $29,953

Question 15

1. Question 15:Refer to the data in the Question 11.What is the total annual cost (Purchase Cost + Ordering Cost + Holding Cost) based upon using the EOQ? (Rounded to the nearest dollar)

   $858,573

   $943,049

   $1,054,421

   $924,545

Question 16

1. Question 16:Refer to the data in the Question 11.What is the optimal reorder point based upon using the EOQ?

   54

   56

   66

   77