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Calculate the total annual cost of holding and setup

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Reference no: EM131881058

A local producer of super high quality dog food sells their product through a network or veterinarians. They order their primary ingredient (grass fed, organic, free range, hormone and antibiotic free, kobe beef) from a local supplier. They tend to use the beef at a rate of 3750 pounds annually. The beef costs them $30.00 per pound. They estimate that it costs $90 in paperwork, labor to place an order for the coffee and for the gas to go pick up the beef. Holding costs are based on a 20% annual interest rate.

What is the optimal order quantity the coffee house? 

Next, Using an order quantity of 250 lbs in the organic dog food setup, calculate the total annual cost of holding and setup in this inventory system. (NOTE: order quantity of 250 has been randomly chosen, it was not chosen using the EOQ formula)

Reference no: EM131881058

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