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A local gift shop is trying to determine how many photos frames to order. The shop...

A local gift shop is trying to determine how many photos frames to order. The shop feels it will sell approximately 800 photos frames in the next year at a unit price of R18.00.The wholesale price that the store pays per photo frame is R12.00. The cost of carrying one photo frame is estimated at R1.60 per year, while ordering costs are estimated at 825.00 per batch ordered.

REQUIRED
(a) Explain the meaning of economic order quantity (EOQ) and reorder point.

(b) Calculate the economic order quantity

(c) Calculate the number of batches that should be ordered in the next year to reach the approximate sales target.

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Expert Solution

jeff jeffy answered 1 year ago
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