Question

Ray's Satellite Emporium wishes to determine the best order size for its best-selling satellite dish. Ray has estimated that weekly demand for this model to be 25 units. His cost to carry one unit is $50 per year and the cost of placing an order with his supplier is $25. He's open 52 weeks a year.

If Ray were to use the EOQ method,

a. How many dishes should Ray order each time he places an order?

b. What is the number of times Ray will order this dish each year?

c. How many of this dish will he have on average in inventory?

d. What is the time between one order and the next?

e. What is the annual cost of using the EOQ model for this dish?

f. Ray currently orders in quantities of 50 dishes per order. How much would he save or lose by switching to the EOQ?

(4 pts each)

Answer 1