Prater Shoe Co. produces and sells excellent quality walking shoes. After production, the shoes are distributed to 20 warehouses around the country. Each warehouse services approximately 100 stores in its region. Prater 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 approximately144,000 pairs of shoes. The ordering cost is $275 per order. The annual carrying cost of a pair of shoes is $2.20 per pair.

Requirement 1.

The optimal number of pairs of shoes per order is 6000 pairs.

Requirement 2.

Demand per week	x	Purchasing lead time (weeks)	=	Reorder point
3,000	x	1	=	3,000	pairs

Requirement 3.

Requirement 4

1. Use the EOQ model to determine the optimal number of pairs of shoes per order. 2.Assume monthly demand is 12,000 shoes and 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 monthly demand is 12,000 pairs of shoes (144,000/12 months), demand each month may vary from the average by up to 20%. To handle the variation in demand, Prater has decided that OR2 should maintain enough safety stock to cover any demand level. How much safety stock should Warehouse OR2 hold? How will this affect the reorder point and reorder quantity? 4.What is the total relevant ordering and carrying costs with safety stock and without safety stock? Requirement 3. Although OR2's average monthly demand is 12,000 pairs of shoes (144,000/12 months), demand each month may vary from the average by up to 20%. To handle the variation in demand, Prater has decided that OR2 should maintain enough safety stock to cover any demand level. How much safety stock should Warehouse OR2 hold? How will this affect the reorder point and reorder quantity? Due to the variation in demand, Warehouse OR2 should hold 2400 pairs of shoes in safety stock. This will the reorder point to pairs of shoes. The reorder quantity will