2. Jean Jeanie spa. work 48 weeks a year to meet demand for jeans which is more or less constant at 200
units a week. They pay £20 for each pair of jeans and aim for a return of 20% on capital invested.
Annual storage costs are 5% of the value of goods stored. The purchasing department costs £65,000
a year and sends out an average of 2000 orders. Find the optimal order quantity for jeans, the best
time between orders and the minimum cost of stocking the item.
3. Demand for an item is steady at 40 units a week and the economic order quantity has been calculated
at 150 units. What is the reorder level when the lead time is:
(a) 1 week (b) 3 weeks (c) 5 weeks (d) 7 weeks?