Answered step by step
Verified Expert Solution
Question
1 Approved Answer
A sports clothing store keeps two variants of a cap. Both variants are classified as A category items in the store's inventory. The first variant
A sports clothing store keeps two variants of a cap. Both variants are classified as A category items in the store's inventory. The first variant has a normally distributed monthly demand of 500 units with a standard deviation of 12. The second variant is customized with the logo of the local baseball team. Each time the team plays a tournament, the store is able to sell approximately 900 units of this customized cap. This demand is also approximately normally distributed with a standard deviation of 50 units. After the tournament, the store is able to sell all the unsold units of the customized caps at 50% of the regular selling price. Both variants cost $10 a unit and sell at a regular price of $14 per unit. The cost of capital for the store is 8% per year. The shipment against a replenishment order is received after 10 days ( 0.33 month) of placing the order with the supplier. Each shipment from the supplier costs $20 in delivery charges and half an hour of staff's time for storage. Staff is paid $16 an hour. a) What is the optimum order quantity (EOQ) and the reorder point for the first variant
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started