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Determine the economic order quantity

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Question - The company Modelo, S.A. de C.V., located in the State of Mexico, produces cookies and pasta, for which it purchases $58,262,169.60 in tons of wheat annually (15,360 tons). Wheat is purchased in multiples of 1,280 tons. Ordering costs are $40,000.00. Annual carrying costs are 3% of the purchase price of $3,793.11 per ton. A lead time of four weeks is available.

a. Determine the economic order quantity.

b. Establish the inventory level at which a new order should be placed.

c. Indicates the total costs that the inventory will incur.

d. Explains the risk this company has according to the investment it manages in inventory.

Reference no: EM133126554

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