Reference no: EM132629692

A major liquor store finds that it sells an average of 100 bottles a week of regular 750 ml bottles of Jameson Irish Whiskey. Assume that there are 50 weeks in a year, and the demand occurs at a constant rate. The holding costs are estimated to be $2 per bottle per year. The liquor store currently purchases whiskey once in every two weeks, and a new order arrives exactly when the previous batch is completely sold out. Each order placed with the supplier costs the liquor store $10.

Answer the following questions.

(a) What is the current order cycle length? Express your answer in years. Round your answer to two decimals if needed.

(b) What is the current order size? Recall that a new order arrives exactly at the moment when the previous batch is sold out.

(c) What is the average inventory of Jameson whiskey at this liquor store?

(d) With the current order quantity, how much does the liquor store spend per year on ordering the inventory of Jameson whiskey?

(e) With the current order quantity, what are their inventory holding costs per year?