Question

Brenda is the owner of a spa store that operates 50 weeks per year. Spair Shampoo is a high margin stock-keeping unit (SKU), but the product goes out of stock frequently. She decides to use a fixed-quantity system (FQS) and orders boxes of Spair Shampoo containing 10 bottles per box from a vendor 160 miles away. She collects the following data with respect to the sales of Spair Shampoo.
Demand 10 boxes per week
Order Cost $40 per order
Item Cost $80 per box per year
Inventory-Holding Cost 15 percent per year
Lead Time 3 weeks
Standard Deviation in Weekly Demand 6
Service Level 96 percent
Using the given data, it can be concluded that the economic order quantity (EOQ) of the Spair Shampoo boxes is:

a. less than 25 boxes.
b. more than 25 but less than or equal to 35 boxes.
c. more than 35 but less than or equal to 45 boxes.
d. more than 55 boxes.

Answer 1

I think it’s C I’m not for sure