Santa's Stock Management

# Santa's Stock Management

This activity involves GCSE/A-Level business concepts.

Santa is working hard with the elves in his workshop preparing PlayStation 5 bundles.

With all the other toys in the workshop and limited space, he needs to minimise the cost of holding the stock of these bundles.

A useful tool in the management of stock is the economic order quantity (EOQ) model which is given by:

$Q = \sqrt{2FS \over H}$

Where Q = economic order quantity in units, F = ordering cost per unit, S = annual demand in units, and H = annual holding cost per unit

## Can you help?

Can you help Santa determine the Economic Order Quantity with the below information?

1. Each PlayStation order costs Santa £17.50.

2. 80,000 letters to Santa ask for one of these bundles.

3. The holding cost is £5.50 per 10 bundles.

Merry Christmas!