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Bagged compost from a single supplier

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Reference no: EM131989078

This is one of the past exam questions about EOQ and I have no clue at all. Please help me with this.

A garden centre obtains its bagged compost from a single supplier. Demand is reasonably constant through the year and last year the company sold 2,000 tonnes of this product. It estimates the cost of placing an order at around £25 each time an order is placed. It calculates that the annual cost of holding inventory is 20 per cent of the purchase cost. The company purchases the compost at £60 per tonne. How much should the company order at a time? [30%] Would you order the EOQ as calculated above, or an alternative amount? [50%]

Reference no: EM131989078

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