Solution-Calculate the reorder point for wood pellets

Calculate the reorder point for wood pellets

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Reference no: EM132791427

Question - Sims Hardware sells wood pellets used in heating stoves and slow-cook grills. The supplier for the pellets pays all incoming freight. Following is detailed data collected regarding pellet inventory needs:

Annual demand for wood pellets 65,000 lbs.

Ordering cost per purchase order $120

Carrying cost per year 15% of purchase costs

Safety-stock requirements none

Cost of wood pellets $4 per 40 lb bag

The purchasing lead time is three weeks. Sims Hardware is open 240 days a year (48 weeks for 5 days a week).

Required -

1. Calculate the EOQ for wood pellets.

2. Calculate the number of orders that will be placed each year.

3. Calculate the reorder point for wood pellets.

Reference no: EM132791427

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Calculate the reorder point for wood pellets

Reference no: EM132791427

Reference no: EM132791427

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