region. Blake uses an EOQ model to determine the number of pairs of shoes to order for each warehouse from the factory. Annual demand for Warehouse OR$2$ is approximately $126,000$ pairs of shoes. The ordering Requirements

Use the EOQ model to determine the optimal number of pairs of shoes per order.

Assume each month consists of approximately $4$ weeks. If it takes $1$ week to receive an order, at what point

should warehouse OR$2$ reorder shoes?

Although OR$2\text{'}$s average weekly demand is $2,625$ pairs of shoes $(126,00012$ months $4$ weeks$),$ demand

each week may vary with the following probability distribution:

If a store wants shoes and OR$2$ has none in stock, OR$2$ can "rush" them to the store at an additional cost of $$2$

per pair. How much safety stock should Warehouse OR$2$ hold? How will this affect the reorder point and

reorder quantity?

cost is $$108$ per order. The annual carrying cost of a pair of shoes is $$2\mathrm{.}10$ per pair.

Read the equirements.

EOQ$=\sqrt[\phantom{2}]{\frac{2DP}{C}}$

The optimal number of pairs of shoes per order is

Requirement $2.$ Assume each month consists of approximately $4$ weeks. If it takes $1$ week to receive an order, at what point should warehouse OR$2$ reorder shoes?

Determine the formula used to calculate the reorder point for reordering shoes in warehouse OR$2,$ then calculate the reorder point.

$2,625$

Purchasing lead time $(wks)$

$1=$

$2,625$ pairs

Demand per week

Requirement $3.$ Although OR$2\text{'}$s average weekly demand is $2,625$ pairs of shoes $(126,00012$ months $4$ weeks$),$ demand each week may vary with the following probability distribution:

If a store wants shoes and OR$2$ has none in stock, OR$2$ can "rush" them to the store at an additional cost of $$2$ per pair. How much safety stock should Warehouse OR$2$ hold? How will this affect the reorder point

and reorder quantity?

The relevant total stockout and carrying costs are the

when a safety stock of

pairs

of shoes is maintained. Therefore, Warehouse OR$2$

hold that number as safety stock.

This will

$]$ the reorder point to

$|$ pairs of shoes. The reorder quantity will