Calculate the amount of EOQ

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Question - Red Revival (RR) operates a megastore featuring sports merchandise. It uses an EOQ decision model to make inventory decisions. It is now considering inventory decisions for its Brisbane Bears jerseys. This is a highly popular item. Data for 2014 are:

Expected annual demand for Bears' jerseys 28,000

Ordering cost per purchase order $60.8

Carrying cost per year $8.0 per jersey

Each jersey costs RR $37 and sells for $110. The $8.0 carrying cost per jersey per year comprises the required return on investment of $0.444 (12%x$37 purchase price) plus $4.0 in relevant insurance, handling and theft-related costs. The purchasing lead time is seven days. RR is open 365 days a year.

Required - Calculate the amount of EOQ?

Reference no: EM133127902

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