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Roxen store start each period with 100 pairs of hiking boots in stock. This stock is depleted each period and reordered. The carrying cost per
Roxen store start each period with 100 pairs of hiking boots in stock. This stock is depleted each period and reordered. The carrying cost per pair of boots per year is RM3.
Required :
(i) What are the total carrying costs for the hiking boots? (2 marks)
(ii) Roxen selles a total of 600 pairs of boots in a year, and the restocking cost is RM20 per order. What are the total restocking costs? (2 marks)
(iii) What is the size of orders should Roxen place to minimize costs? (3 marks)
(iv) What is the total costs incurred if Roxen places its order based on Economic Order Quantity (EOQ)? (3 marks)
(v) Based on your answers in (i) to (iv), should Roxen increase or decrease its size of order each time? Explain your answer. (2 marks)
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