OUR OLD FRIEND, FLAIR FURNITURE NO LONGER IS A MANUFACTURER OF TABLES AND CHAIRS. IT IS NOW A RETAILER SELLING BEDS. FLAIR FURNITURE NEEDS TO PURCHASE 100,000 BEDS IN 2022 FROM ITS SUPPLIER. ORDER COSTS FOR BEDS ARE $125 PER ORDER, AND CARRYING COSTS ARE $20/UNIT PER YEAR. FLAIR FURNITURE HAS A HURDLE RATE OF 12%, AND THE BEDS THAT FLAIR FURNITURE PURCHASES FROM ITS SUPPLIER COST $500/UNIT.

1. What is the EOQ for Flair Furniture?

a. 259 beds.

b. 359 beds.

c. 459 beds.

d. 559 beds.

2. What is the total relevant cost (ordering cost + carrying cost) for the year for Flair Furniture at an order size equal to 600 beds?

1. $54,833
2. $64,833
3. $74.833
4. $44,833