The following are the assumptions for analyzing the potential warehouse capacity for Northcutt

Bikes:

The inventory for fender bracket $($FB$378)$ part SKU at the beginning was $120$ units. After

the calculations of EOQ $($Economic Quantity Order$)$ shows $430$ units.

The inventory for Gear Sprocket $($GS$131)$ part SKU at the beginning was $850$ units. After

calculations of EQO $($Economic Quantity Order$)$ shows $174$ units.

Based on the calculations of inventory $($FB$378)120$ and $($GS$131)850$ represents $970$

units equivalent $95\%$ of the inventory occupation of warehouse.

After EOQ $($Economic Quantity Order$)$ calculations for the inventory of bracket $($FB$378)$

$430$ and $($GS$131)174$ represents $59\%$ of the inventory occupation of warehouse.

Before EOQ:

$($FB$378)120$ units $+($GS$131)850$ units $=970=95\%$ of warehouse capacity

After EOQ :

$($FB$378)430$ units $+($GS$131)174$ units $=604=59\%$ of warehouse capacity

$970x=604**0\mathrm{.}95(95\%)$

$x=\frac{574}{970}=59\mathrm{.}17\%$

The space in the warehouse had increased from $45\%$ to $95\%$ after the current order

quantities that Northcutt Bikes place for those parts $($FB$378)$ and $($GS$131)$ the warehouse

capacity had reduced $36\%,$ increasing room for other parts. When there is stock in the

warehouse that is not necessary, waste is present within this stock, which will signify a

loss of physical space and loss of investment.

The assumed average annual holding cost for each unit is $$10$