CHAPTER 12: Inventory Management at Cruise International, Inc. Go to Chapter 12 for the information.

4. Develop a recommendation with regards to accepting one of the supplier's offers. (Learning Objective 4.2)

*****Addition Info Needed*******

As our text points out, the EOQ is a continuous review system, used to keep track of the inventory on hand each time stock is added or withdrawn.If the withdrawal reduces the inventory level to the reorder point or below, a replenishment order is needed.The EOQ tells you when to place a replenishment order and determines the order quantity that minimizes annual inventory cost.

The formula for the EOQ is:Q = 2DS/H

Where: Q = optimal order quantity; D = annual demand; S= ordering or setup cost;and H = holding cost.

Increase in the demand or ordering costs will increase the EOQ since they have a positive relationship, which also means that a decrease in these factors will decrease the EOQ.This is the case since both demand and ordering costs are in the numerator of the EOQ formula. Since holding costs is in the denominator, there is an inverse or negative relationship between these costs and EOQ. For example, as holding costs increase, the EOQ decreases and vice versa.

***When evaluating the supplier's offer, you must calculate the EOQ for all three prices and determine which one is feasible.To complete the analysis, you will need to calculate the annual total costs for the feasible quantity and at the minimum quantity needed to purchase at a time for each lower breakpoint.Comparing those three calculations will identify the best ordering policy.Finish by completing this sentence: The best ordering policy is to purchase jQuery22407691096345844186_1627929667562? syringes at a time.