Wallace Company sells widgets at a constant rate of 100 units

per month. The cost of ordering each batch of widgets is $600 and the carrying cost per unit per month is $2. The

company wants to maintain a safety stock of 50 units to

avoid stockouts. The lead time for ordering and receiving a

batch of widgets is 2 months. Determine the EOQ and ROP

for ABC Company.

ROP = (Lead time demand Safety stock) + Average demand during lead time) -

Safety stock = (Maximum demand + Average demand) / 2