Assignment:
A Liverpool, England, camera supplies wholesaler purchases $1 million worth of camera equipment each year. It costs $100 to place and receive an order, and the annual holding cost per item is 20 percent of the item value (20%).
a. What is the $ value of the EOQ?
b. How many months supply is the EOQ?
c. How often should orders be placed?
d. How much will the annual holding cost change if the company orders monthly? How much will the annual ordering cost change?
e. What should the $ value of the EOQ be if the wholesaler doubles its annual purchases? What should it be if (instead) the ordering cost doubles? What should it be if the holding cost drops to 10 percent?