Reference no: EM132708031

A local sports equipment retailer sells roughly 3150 pairs of skates throughout the year. Annual holding cost of $5 per pair of skates and ordering cost is $32 per order. The store is open 280 days a year (closed on weekends and holidays). On average it takes 8 days between ordering stock and receiving it.

a. What is the EOQ?

b. How many times does the store have to reorder skates throughout the year?

c. What is the length of time between each order? (how many days in between of each order)

d. What is the total inventory cost?

2. A bicycle company sells 53,000 bike tires a year. The company purchases these tires at $7 per tire. Holding costs is 25% of purchasing cost per tire. Ordering cost comes in at $35 per order. The company operates for 300 days a year and lead time for purchases are 6 days.

a. What is the EOQ?

b. How many times does the store have to reorder skates throughout the year?

c. What is the length of time between each order? (how many days in between of each order)

d. What is the total inventory cost?

3. Assuming all information from question number two is the same, as a manger would you consider switching to a supplier that would offer you the same tires at $1 less but would increase your lead time by 3 days? Why or why not? Show calculations.