1. A pet supplies store sells 800 cases per year of Arfo dog food. The cost to place and receive an order with the supplier is $50 and it costs the store $1.60 to keep a case in inventory for a year.
a) The economic order quantity to the nearest case -
b) The average inventory level -
c) The average number of orders per year-
d) The optimal time between orders -
2. Wilshire Farms uses 6000 pounds per year of a special feed supplement that costs $5 per pound.The supplement’s supplier offers a two percent discount (to $4.90 per pound) if it is ordered in quantities of 3000 pounds or more at a time. It costs $100 to place and receive an order. Wilshire uses an inventory carrying charge of 40 percent of value per year. Determine the economic ordering quantity.
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Total cost for this is 2,711.09
which is smaller than the 3000 pound/order 3,140.00...
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