Capers Inc. is also initiating an inventory management program using EOQ. Capers needs fastener supplies to manufacture its products. The CFO estimates that the company will need about 250,000 cases next year. The cost of storing cases is about $1.10 each. The ordering cost is $400 for a shipment.
1. What is the EOQ?
2. How many times will you order?
3. What are the shortcomings of the EOQ? What is your rationale?