What is the eoq for this cloth

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Question - SAFETY STOCK - Woody Toys, a large manufacturer of toys and dolls, uses large quantities of flesh-colored cloth in its doll production process. Throughout the year, the firm uses 1,250,000 square yards of cloth. The fixed costs of the placing and receiving an order are $2,000 which include; a $1,500 setup charge at the mill. The price of the cloth is $2.50 per square yard, and the annual cost of carrying the inventory item is 20 percent of the price. Woody maintains a 12,500-square-yard safety stock. The cloth supplier requires a 2-week lead time from order to delivery, (a) what is the EOQ for this cloth? (b) What is the total inventory cost, including the safety stock? (c) Using a 52-week year, at what inventory unit level should an order be placed?

Reference no: EM133095898

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