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An ophthalmology practice is deciding whether to offer prescription eyeglasses for sale in-house. The new service would require the training and hiring of additional personnel, inventory for glasses and frames, and some minor space alterations. The utilized space in the office would be a charge allocated to the program. The costs for this new service are:
Variable Costs (electricity, $80 per completed labor, supplies) pair of eyeglasses
Total Fixed Cost $36,000
How much volume does the group need to break even if they charge $100 per pair of eyeglasses? If they charge $200?
Determine the EOQ, average inventory, orders per year, average daily demand, reorder point, annual ordering costs, and annual carrying costs.
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