Determine the optimal economic order quantity soft goods

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The soft goods department of a large department store sells 400 units per month of a certain large bath towel. The unit cost (P) of a towel to the store is $16.00 and the cost of placing an order has been estimated to be $200.00 per order. The store uses an inventory carrying charge of $1.00 per month.

(a) Determine the optimal economic order quantity (EOQ).

(b) Compute the order frequency (= the number of orders per year).

(c) Determine the annual inventory holding cost and annual ordering cost.

Reference no: EM132357971

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