Problem
A. One of the top-selling items in the container group at American International Airport's gift shop is a bird feeder. Sales are 20 units per week, and the supplier charges $60 per unit. The cost of placing an order with the supplier is $45. The annual holding cost is 20% of a feeder's value, and the shop operates 52 weeks per year. The shop opens 7 days a week and it normally takes 5 days to receive an order.
B. Decide how much to order so as to minimize inventory cost.
C. What is the total inventory cost if the EOQ is used?
D. How many times should the shop place an order to meet demand requirements if the EOQ were used?
E. What is the order cycle if the EOQ is used?
F. Decide the reorder point.