Q1.

Use exhibit 4 and the 2012 annual demand to find out EOQ and ROP for the 5
SKUs scheduled to be produced in the last week of June.

Product (12 oz)

3JS Marran Kerry DOM AAA
(Strawberry (Raspberry (Peach Jam) (Blueberry (Apple/Mint
Jam) Jelly) Jam) Jelly)
Sales/week 74 58 38 23 16
Setup cost 63.7 63.7 63.7 63.7 63.7
Annual demand 3869 3006 1970 1211 832
Carrying cost 0.09 0.09 0.09 0.09 0.09
Unit cost 28.34 30.52 26.86 29.01 26.32
EOQ 440 373 322 243 212
ROP 223 173 114 70 48
% increase in 28% 29% 31% 35% 33%
sales
% increase in 14% 13% 15% 17% 16%
EOQ

Three Jays Co. used one-month-old data to estimate demand for the
following month. By adding risk and safety factor and by using 2012s annual
demand, changes in EOQ and ROP are represented as follows:

Old EOQ New EOQ Old ROP New ROP

Strawberry Jam 387 440 173 223
Raspberry Jelly 329 373 135 173
Peach Jam 280 322 86 114
Blueberry Jam 208 243 51 70
Apple/Mint Jelly 183 212 36 48

This shows that the corporation needs to acquire the necessary amount of data
to forecast demand and to function at an optimal level. This will also lead to the
management of inventory in an efficient manner.
In fact, the entire scheduling was flawed. The new amounts will help the
company to operate at the optimal level while reducing overall costs.

! 1