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The I-75 Carpet Discount Store has an annual demand of 10,000 yards of Super Shag carpet....

The I-75 Carpet Discount Store has an annual demand of 10,000 yards of Super Shag carpet. The annual carrying cost for a yard of this carpet is $0.75, and the ordering cost is $150. The carpet manufacturer normally charges the store $8 per yard for the carpet; however, the manufacturer has offered a discount price of $6.50 per yard if the store will order 5,000 yards. How much should the store order, and what will be the total annual inventory cost for that order quantity.

ORDERING
EOQ
         =
Average inventory = Q/2   =
Annual carrying cost   =
Number of orders =  
Annual order cost =  
Total inventory purchase cost =
Total inventory cost =
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Answer #1


Average Inventory = 2000 yards

Annual Carrying cost = $750

Number of Orders = 5

Annual Order Cost = $750 = 5 x 150

Total Inventory purchase cost = $81500

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