What is the annual cost of ordering and carrying tea

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Reference no: EM131911832

Question: 1. The Always Fresh Grocery Store carries a particular brand of tea that has the following characteristics: Sales = 8 cases per week Ordering cost = $10 per order Carrying charge = 20 percent per year Item cost = $80 per case

a. How many cases should be ordered at a time?

b. How often will tea be ordered?

c. What is the annual cost of ordering and carrying tea?

d. What factors might cause the firm to order a larger or smaller amount than the EOQ?

2. The Grinell Machine Shop makes a line of metal tables. Some of these tables are carried in finished goods inventory. A particular table has the following characteristics: Sales = 300 per year Setup cost = $1200 per setup (this includes machine setup for all the different parts in the table) Carrying cost = 20 percent per year Item cost = $25

a. How many of these tables should be made in a production lot?

b. How often will production be scheduled?

c. What factors might cause the firm to schedule a lot size different from the one you have computed?

Reference no: EM131911832

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