It is Jan 1st and Great Distributing LLC has made a strategic decision on an annual contact to purchase a fixed monthly amount for the remained of the year because of a good price from its suppliers. The fixed monthly amount will be based on the EOQ.
1. Determine the EOQ given the following and create a monthly inventory projection to determine the estimated year end inventory given the following information:
Assume Inv Loss is month end (so beginning plus new inventory)
In July a sudden 10% demand increase occurs, but the new inventory purchase amount is already committed given Great Distributing's arrangement
Annual Demand 25000
Reord Cost 3000
CC 115
Starting Inv 1500
Inv Loss 3%
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