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GROCERY STORE PROBLEM: A local grocery store faces demand for one of its items at a constant rate of 20,000 boxes per year. It costs them $5 to process an order and $0.50 per box per year to carry the item in stock. The stock is received three working days after an order is placed. Assume 250 working days in a year and no backordering.
a. What is the demand during lead time assuming that there is no variability?
b. Assume 250 working days in a year and no backordering. What is the EOQ?
c. What is the total inventory cost at EOQ, excluding the item cost?
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