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Problem 5. (20 pts) Use EOQ model to solve following problem. The item is demanded 50 weeks a year. Item cost: $10 Fixed Order cost:
Problem 5. (20 pts) Use EOQ model to solve following problem. The item is demanded 50 weeks a year. Item cost: $10 Fixed Order cost: $250 Annual holding cost: 25% of item cost Average demand: 500 per week, constant rate a. Calculate the optimal order quantity and the total inventory cost. b. If your purchase quantity is equal to or above 3000 , the fixed ordering cost is reduced to $200. Would you take advantage of it? How much would you save annually? c. If your purchase quantity is equal to or above 3000 , the item cost is reduced to $8. Would you take advantage of it? How much would you save annually
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