You are lucky enough to be the owner of IMSE Toaster, a new establishment in Aggieville. As such you sell 300 toasters every month (or 75 a week). You buy the toasters in quantities of 500 calculated using EOQ (!) (hence it is your Q*). Your holding cost consist of 36% per year, and each toaster costs you $40.
What is the setup cost used in finding the EOQ order size?
Now, you received an offer from another supplier giving you 10% price discount you buy the toasters in quantity of 1500 or more. Should you accept this offer
Sticking to your solution in part (a), your supplier's lead time is 8 weeks. What should be your reorder point (R) if you follow Continuous Review Policy? (If you need you can assume 48 weeks in a year).