What is the cost of the inventory policy

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Reference no: EM133587658

Question: The rising popularity of bubble and squeak as a breakfast item on the menu has resulted in a steady demand for peas. Over the course of the past week, 457 patrons have ordered the hearty breakfast and each serving contains a half cup of English peas. It costs two cents to hold a half cup of peas in inventory for a year and $3 to place an order (remember they come all the way from England!). It takes two weeks to ship a container from England loaded with peas.

(a) What is the optimal order quantity?

(b) What is the average inventory if they order at the optimal order quantity? What is the cost of the inventory policy (excluding cost of goods) if the diner orders at the economic order quantity?

(d) What is the average flow time of a half cup of peas if the diner orders at the economic order quantity?

(e) The diner orders at the economic order quantity but an analysis of dates on the cans of peas revealed that the flow time was actually 5 weeks. A quick check revealed that the computer had automatically adjusted up the economic order quantity as demand had risen during the past few months. What is the new weekly demand for English peas?

Reference no: EM133587658

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