Assignment Task:
Ergonomics Inc. sells ergonomically designed office chairs. The company has the following information:
Average demand = 25 units per day
Average lead time = 32 days
Item unit cost = $52 for orders of less than 220 units
Item unit cost = $50 for orders of 220 units or more
Ordering cost = $27
Inventory carrying cost = 25%
The business year is 250 days
Assume there is no uncertainty at all about the demand or the lead time.
Question: Calculate EOQ if unit cost is $52 and $50. (Note: These EOQs do not need to be feasible in their price range.) (Round up your answers to the next whole number.)