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A company manufactures harnesses for horses. It requires 5000 metres of leather per month. The company buys the leather from a supplier at a cost of R150 per metre. The company's inventory carrying cost is estimated to be 5% of the metre cost of leather and the ordering cost is R70 per order.
You are required to answer all of the questions below.
Question 1: Calculate the EOQ.
Question 2: What is the number of orders per year?
Question 3: Compute the total cost.
Question 4: Provide a discussion on the relevance of the assumptions of the economic order quantity model in today's economy.
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