Expected annual demand for Liverpool jerseys 10,000,000
Ordering cost per purchase order Tshs. 200,000
Carrying cost per year Tshs. 7000 per jersey
Each jersey costs FB Tshs. 40,000 and sells for Tshs. 80,000. The Tshs. 7000 carrying cost per
Jersey per year comprises the required return on investment of Tshs. 4,800.00 (12% Tshs.
40,000 purchase price) plus Tshs. 2,200 in relevant insurance, handling, and theft-related costs.
The purchasing lead time is 7 days. FB is open 365 days a year
Required
(I) Calculate EOQ
(ii) Calculate number of orders per year
(iii) Calculate Total inventory cost, Total ordering cost and total carrying cost
