Golf Gear Inc. manufactures custom golf clubs and orders 250,000 graphite shafts per year from its manufacturer
The CEO at Golf Gear wishes to know the optimal EOQ. The carrying cost is $0.45 per shaft per year. The order cost is $750 per order. What is the EOQ for Golf Gear? What are the total annual carrying costs? What are the total annual ordering costs? Please round all of your answers to the nearest dollar or unit.
What will be an ideal response?
Answer: EOQ = = = 28,868 graphite shafts (rounded up)
Total annual ordering costs = OC × (S/Q) = $750 × (250,000/28,868) = $6,495.
Total annual carrying costs = CC × (Q/2) = $0.45 × (28,868/2) = $6,495.
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