Question

NEW NUMBERS

Hiking Boots R Us is a local shoe store in Franklin. Annual demand for a popular hiking boot is 700 pairs per year, and Nairo Quintana, the owner of Hiking Boots R Us, has the habit of ordering 60 pairs of these hiking boots every time he places an order. Nairo estimates that the ordering cost is $20 and the cost of the hiking boots is $63. (Goal Seek would be useful if you are using the Excel template, otherwise you can use the equations, this is a situation when you know “Q” and are determining other parameters in the calculation of “Q”).

a) What is the annual ordering cost if the optimal ordering quantity is 60?

b) What is the carrying cost (%) if the optimal ordering quantity is 60? (Enter real number- i.e. 12.5% should be entered as 12.5)

c) What is the annual holding cost if the optimal ordering quantity is 60?

d) What is the EOQ if carrying cost is 15%?

Answer 1