Fan Shop

(FS)

operates a megastore featuring sports merchandise. It uses an

EOQ

decision model to make inventory decisions. It is now considering inventory decisions for its soccer jerseys product line. This is a highly popular item. Data for

2018

are:

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Each jersey costs

FS

$40

and sells for

$81.

The

$7

carrying cost per jersey per year comprises the required return on investment of

$4.00

(=10%

of

$40

purchase price) plus

$3.00

in relevant insurance, handling, and theft-related costs. The purchasing lead time is 7 days.

FS

is open

364

days a year.

Expected annual demand for soccer jerseys	10,000
Ordering cost per purchase order	$200
Carrying cost per year	$7 per jersey

equirement 1. Calculate the

EOQ.

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)

ModifyingAbove EOQ equals StartFraction DP Over Upper Q EndFraction plus StartFraction QC Over 2 EndFraction With EOQ=DPQ+QC2

ModifyingAbove EOQ equals StartFraction Upper D Over left parenthesis 1 plus Upper P right parenthesis Superscript Upper C EndFraction With EOQ=D(1+P)C

ModifyingAbove EOQ equals StartRoot StartFraction 2 DP Over Upper C EndFraction EndRoot With Subscript EOQ=2DPC

Part 2

The EOQ for soccer jerseys is

enter your response here

jerseys. (Round your answer to the nearest whole number.)

Part 3

Requirement 2. Calculate the number of orders that will be placed each year. (Round your answer up to the nearest whole number.)

Determine the formula used to calculate the number of orders that will be placed each year, and then calculate the orders per year.

Number of orders	=

=		=		orders per year

Part 4

Requirement 3. Calculate the reorder point. (Round the demand per day to two decimal places. Round your final answer up to the nearest whole number.)

Determine the formula used to calculate the reorder point for the jerseys, and then calculate the reorder point.

	x		=	Reorder point
	x		=		jerseys