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Using appropriate EOQ model, present a report to the management of retail outlet by determining the EOQ size to be ordered. Owning a retail
Using appropriate EOQ model, present a report to the management of retail outlet by determining the EOQ size to be ordered. Owning a retail unit in jubail city, you have decided to purchase the automobile parts according to the EOQ model from the manufacturer at 500 SAR per unit and ship it to the customers. The monthly demand of the automobile parts used in the engine of the car is 12 units. The ordering cost is 30 SAR and the holding cost is 20%. The working days per year of the retail out is 275 days and the lead-time is 15 days. (Write the formulae) a. Perform the EOQ analysis and determine the optimal lot size to order. b. Assume that the demand is constant, what is the reorder point? c. Suppose you perform an analysis and observe that the lead-time demand is normal probability distribution with mean 10 and the standard deviation is 2. What is the revised reorder point if you can tolerate two stock out-per year? d. What is the safety stock referring to O. If the holding cost is 3 SAR/unit/year. What is the extra cost due to the uncertainty of demand?
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