Problems to Solve on EXCEL
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Get it written →Problem:
A North Face retail store in Chicago sells 500 jackets each month. Each jacket costs the store $100, and
the company has an annual holding cost of 25 percent. The fixed cost of a replenishment order
(including transportation) is $100. The store currently places a replenishment order every month for 500
jackets.
Questions:
1. What is the annual holding and ordering cost?
2. On average, how long does a jacket spend in inventory?
3. If the retail store wants to minimize ordering and holding cost, what order size do you
recommend?
4. How much would the optimal order reduce holding and ordering cost relative to the current
policy?
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