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The Fabric World sells fabrics to a wide range of industrial and consumer users. One of the products it carries is denim? cloth, used in the manufacture of jeans and carrying bags. The supplier for the denim cloth pays all incoming freight. No incoming inspection of the denim is necessary because the supplier has a track record of delivering? high-quality merchandise.
The purchasing officer of the Fabric World has collected the following? information:
Annual demand for denim cloth: 27,000 metresOrdering cost per purchase order: $180Carrying cost per year: 30?% of purchase costs?Safety-stock requirements: NoneCost of denim cloth: $10 per metre
Problem 1: Calculate the EOQ for denim cloth.
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