Product Orders (Demand) Information

The company provides you with the following information for the past two fiscal years:

Demand Characteristic	2019	2020
Annual Demand, sets	26,918	31,763
Average Weekly Demand	518	611
Standard Deviation of weekly Demand	130	153

Product Forecasting Information

Throx uses two main forecasting methods based on annual data to predict orders for the following year, a weighted moving average and exponential smoothing. They provide you with the following information about forecasts for FY 2017 through FY2020:

	Actual Demand (Three Sock Sets)	Weighted Moving Average Fcst	Exponential Forecast
2017	18,850	15,500	16,300
2018	22,432	17,060	18,340
2019	26,918	20,614	21,613
2020	31,763	24,765	25,857

1. This question will have you calculating 2 different EOQ and ROP values and interpreting the results.For both EOQ and ROP, give your final answer in full sock sets (ROUND UP to the next whole number). The specific questions to answer are based in parts a-c.Tips to solve the EOQ and ROP are given below in bullet points.
   1. Calculate EOQ and ROP for FY2020 based on the FY2020 forecast value that you determined to be most accurate in Question #1.
   2. Calculate the EOQ and ROP based upon actual demand for FY2020
   3. Use the total inventory cost calculation to determine total inventory costs for each of the three EOQ results: EOQ from part a, EOQ from part b, and the Q that Throx is currently using (given in the case) When determining the costs use 2020 actuals for your Demand (D) for all three scenarios.
      1. Compare the total inventory costs from the three results and analyze what it shows you.
      2. What are the implications of the ROP Throx is currently using versus the ROP based on Actual Demand. .

See additional tips below:

• Use a service level of 95% (z=1.65) when calculating the ROP
• For the standard deviation of weekly demand, use the data provided in the table on page 2 of the case with the FY2020 forecast for all approaches.
• Annual Inventory management costs will include the following: Annual Holding Costs, Annual Ordering Costs, and Purchase Cost.