Clarkson 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. Clarkson 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 150,000 pairs of shoes. The ordering cost is $276 per order. The annual carrying cost of a pair of shoes is $2.30 per pair.

Clarkson 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. Clarkson 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 150,000 pairs of shoes. The ordering cost is $276 per order. The annual carrying cost of a pair of shoes is $2.30 per pair Read the requirements, Requirement 1. Use the EOQ model to determine the optimal number of pairs of shoes per order. Begin by selecting the formula used to calculate EOQ. (D-Demand 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 600 pair 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 3,125 pairs of shoes (150,000 = 12 months = 4 weeks), demand each week may vary with the following probability distribution: Total demand for 1 week 2,100 pairs 2,350 pairs 3,125 pairs 3,335 pairs 3,645 pairs Probability (sums to 1.00) 0.02 0.10 0.76 0.10 0.02 If a store wants none stock, OR2 can "ru them store at an additional cost $2 per pair. How much safety stock should Warehouse OR2 hold? How will this affect the reorder point and reorder quantity? Print Done Requirement 3. Although OR2's average weekly demand is 3,125 pairs of shoes (150,000 = 12 months = 4 weeks), demand each week may vary with the following probability distribution: Total demand for 1 week 2,100 pairs 2,350 pairs 3,125 pairs 3,335 pairs 3,645 pairs Probability (sums to 1.00) 0.02 0.10 0.76 0.10 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 $2 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 of shoes is maintained. Therefore, Warehouse OR2 This will the reorder point to when a safety stock of pairs hold that number as safety stock. pairs of shoes. The reorder quantity will