Chadwick Shoe Co. produces and sells an excellent quality walking shoe. After production, the shoes are distributed to 20 warehouses around the country. Each warehouse services approximately 100 stores in its region. Chadwick uses an EOQ model to determine the number of pairs of shoes to order for each warehouse from the factory. Annual demand for Warehouse OR2 is approximately 132,000 pairs of shoes. The ordering cost is $264 per order. The annual carrying cost of a pair of shoes is $2.50 per pair Read the requirements Requirement 1. Use the EOQ5 model to determine the optimal number of pairs of shoes per order. Begin by selecting the formula used to calculate EOQ. (D = 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=/2DP The optimal number of pairs of shoes per order is pair. Requirement 2. Assume each month consists of approximately 4 weeks. If it takes 1 week to receive an order, at what point should warehouse OR2 reorder shoes? Determine the formula used to calculate the reorder point for reordering shoes in warehouse OR2, then calculate the reorder point. = Reorder point = pairs (2) Requirement 3. Although OR2's average weekly demand is 2,750 pairs of shoes (132,000 = 12 months = 4 weeks), demand each week may vary with the following probability distribution: Total demand for 1 week 2,000 pairs 1,950 pairs 2,750 pairs 2,970 pairs 3,220 pairs Probability (sums to 1.00) 0.02 0.30 0 .36 0.30 0.02 If a store wants shoes and OR2 has none in stock. OR2 can "rush" them to the store at an additional cost of $4 per pair. How much safety stock should Warehouse OR2 hold? How will this affect the reorder point and reorder quantity? The relevant total stockout and carrying costs are the (3) when a safety stock of pairs of shoes is maintained. Therefore, Warehouse OR2 (4) hold that number as safety stock. This will (5) the reorder point to pairs of shoes. The reorder quantity will (6) 4: Requirements 1. Use the EOQ model to determine the optimal number of pairs of shoes per order. 2. Assume each month consists of approximately 4 weeks. If it takes 1 week to receive an order, at what point should warehouse OR2 reorder shoes? 3. Although OR2's average weekly demand is 2.750 pairs of shoes (132,000 - 12 months = 4 weeks), demand each week may vary with the following probability distribution: Total demand for 1 week 2,000 pairs 1,950 pairs 2,750 pairs 2,970 pairs 3,220 pairs Probability (sums to 1.00) 0.02 0.30 0.36 0.30 0.02 If a store wants shoes and OR2 has none in stock, OR2 can "rush" them to the store at an additional cost of $4 per pair. How much safety stock should Warehouse OR2 hold? How will this affect the reorder point and reorder quantity? 5: More Info Economic order quantity (4) (5) (1) O O Annual demand Cost per pair of shoes Demand per week O EOQ Number of months Ordering cost per order Purchasing lead time (wks) (2) O O Annual demand Cost per pair of shoes O Demand per week O EOQ Number of months Ordering cost per order Purchasing lead time (wks) (3) O O highest O lowest O O should should not O decrease O increase (6) O decrease. increase O remain the same. Chadwick Shoe Co. produces and sells an excellent quality walking shoe. After production, the shoes are distributed to 20 warehouses around the country. Each warehouse services approximately 100 stores in its region. Chadwick uses an EOQ model to determine the number of pairs of shoes to order for each warehouse from the factory. Annual demand for Warehouse OR2 is approximately 132,000 pairs of shoes. The ordering cost is $264 per order. The annual carrying cost of a pair of shoes is $2.50 per pair Read the requirements Requirement 1. Use the EOQ5 model to determine the optimal number of pairs of shoes per order. Begin by selecting the formula used to calculate EOQ. (D = 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=/2DP The optimal number of pairs of shoes per order is pair. Requirement 2. Assume each month consists of approximately 4 weeks. If it takes 1 week to receive an order, at what point should warehouse OR2 reorder shoes? Determine the formula used to calculate the reorder point for reordering shoes in warehouse OR2, then calculate the reorder point. = Reorder point = pairs (2) Requirement 3. Although OR2's average weekly demand is 2,750 pairs of shoes (132,000 = 12 months = 4 weeks), demand each week may vary with the following probability distribution: Total demand for 1 week 2,000 pairs 1,950 pairs 2,750 pairs 2,970 pairs 3,220 pairs Probability (sums to 1.00) 0.02 0.30 0 .36 0.30 0.02 If a store wants shoes and OR2 has none in stock. OR2 can "rush" them to the store at an additional cost of $4 per pair. How much safety stock should Warehouse OR2 hold? How will this affect the reorder point and reorder quantity? The relevant total stockout and carrying costs are the (3) when a safety stock of pairs of shoes is maintained. Therefore, Warehouse OR2 (4) hold that number as safety stock. This will (5) the reorder point to pairs of shoes. The reorder quantity will (6) 4: Requirements 1. Use the EOQ model to determine the optimal number of pairs of shoes per order. 2. Assume each month consists of approximately 4 weeks. If it takes 1 week to receive an order, at what point should warehouse OR2 reorder shoes? 3. Although OR2's average weekly demand is 2.750 pairs of shoes (132,000 - 12 months = 4 weeks), demand each week may vary with the following probability distribution: Total demand for 1 week 2,000 pairs 1,950 pairs 2,750 pairs 2,970 pairs 3,220 pairs Probability (sums to 1.00) 0.02 0.30 0.36 0.30 0.02 If a store wants shoes and OR2 has none in stock, OR2 can "rush" them to the store at an additional cost of $4 per pair. How much safety stock should Warehouse OR2 hold? How will this affect the reorder point and reorder quantity? 5: More Info Economic order quantity (4) (5) (1) O O Annual demand Cost per pair of shoes Demand per week O EOQ Number of months Ordering cost per order Purchasing lead time (wks) (2) O O Annual demand Cost per pair of shoes O Demand per week O EOQ Number of months Ordering cost per order Purchasing lead time (wks) (3) O O highest O lowest O O should should not O decrease O increase (6) O decrease. increase O remain the same