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You are applying for a job at a major door and window retailer. The manager would like to evaluate your skills in the area of
You are applying for a job at a major door and window retailer. The manager would like to evaluate your skills in the area of inventory management and he provides you with the following information:
- Annual demand is 450 windows (an average of 9 every week).
- Average cost of each window is P250.
- Purchase order lead time is 21 days.
- Relevant handling costs are P5,000 per year.
- Relevant ordering costs are P150 per order.
- Shareholders expected return is 8%.
- Shipments are FOB destination.
What is the economic order quantity (EOQ)?
A. 66
B. 45
C. 54
D. 72
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