1. A firm is trying to decide how much of a particular liquid should be ordered.

The
liquid is kept in a storage tank; there are separate inflow and outflow pipes for the tank.
The firm uses 500 gallons of liquid per day. When an order is placed with the supplier of
the liquid, the truck arrives 7 days later to pump liquid into the tank. Because of the small
size of the input pipe, only 2500 gallons per day can be pumped into the tank. The fixed
costs of placing an order are $ 500 per order. Carrying cost are 20% per year. And each
gallon of liquid costs $ 10.
Calculate the optimum order quantity and the order point.
2. Manatee uses EOQ logic to determine the order quantity for its various computer
components and is planning its Avatar chip orders. Forecasted annual demand is 10,000
Avatar chips. The setup costs associated with placing and receiving each Avatar chip
order is $9.25. It is estimated that the cost to carry an Avatar chip in inventory for a year
is $5.00.
3. Marina uses EOQ logic to determine the order quantity for the nylon fabric its uses in
the manufacturing of its flags. Forecasted annual demand for nylon fabric is for 100,000
yards. The setup costs associated with placing and receiving each nylon fabric order is
$50.00. It is estimated that the cost to carry a yard of nylon fabric in inventory for a year
is $10.00. Calculate the nylon fabric EOQ for Daytona.