carrying cost is $$10\mathrm{.}40$ per motor. It currently takes $2$ weeks to supply an order to the assembly plant.

Read the requirements.

Requirement $1.$ What is the optimal number of motors that Harris's managers should order according to the EOQ model?

Begin by selecting the formula used to calculate EOQ. Demand in units for one year, $P=$ Ordering cost per purchase order, $C=$ Carrying cost of one unit in stock, $Q=$ Any order quantity$)$

EOQ$=\sqrt[\phantom{2}]{\frac{2DP}{C}}$

The optimal number of motors per order is

motors.

Requirements

What is the optimal number of motors that Harris' managers should order

according to the EOQ model?

At what point should managers reorder the motors, assuming that both demand

and purchase$-$order lead time are known with certainty?

Now assume that demand can vary during the $2-$week purchase$-$order lead time.

The following table shows the probability distribution of various demand levels:

If Harris runs out of stock, it would have to rush order the motors at an additional

cost of $$3$ per motor. How much safety stock should the assembly plant hold? How

will this affect the reorder point and reorder quantity?