What are the shortcomings of the EOQ? What is your rationale?

  • Prepare a monthly cash budget for Capers Inc. covering the first 7 months of 2010.

Part Three:  EOQ

Capers Inc. is also initiating an inventory management program using EOQ. Capers needs fastener supplies to manufacture its products. The CFO estimates that the company will need about 250,000 cases next year. The cost of storing cases is about $1.10 each. The ordering cost is $400 for a shipment.

Required:

  1. What is the EOQ?
  2. How many times will you order?
  3. What are the shortcomings of the EOQ? What is your rationale?

Deliverables:

  • By Tuesday, September 1, 2015, complete the requirements for Parts One, Two, and Three above. Submit your results to the W5: Assignment 2 Dropbox in a Microsoft Excel document showing all calculations, and in good form.