Simplify order processing to reduce the ordering cost

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A food processor uses approximately 27,000 glass jars a month for its fruit juice product. Because of storage limitations, a lot size of 4,000 jars has been used. Monthly holding cost is 18 cents per jar, and reordering cost is $60 per order. The company operates an average of 20 days a month.

The manager would prefer ordering 10 times each month but would have to justify any change in order size. One possibility is to simplify order processing to reduce the ordering cost. What ordering cost would enable the manger to justify ordering every other day (i.e., 10 times a month)?

This is from Operations Management 12th edition by William J. Stevenson, and after doing all the work by myself I ended up with $24.30 which is the same answer that is located on this site when I looked it up but in the book it says that right answer is $54.20. I was just curious as to how to get to $54.20.

Reference no: EM13856110

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