Reference no: EM132517080

Garry's Golf Supplies is a local retail outlet which sells golf balls. Garry's purchases the golf balls from Green Grass Incorporated at $0.75 per ball; the golf balls are shipped in cartons of 72, FOB destination. Annual demand is 172,800 golf balls at a rate of 3,322 balls per week. Garry's Golf Supplies earns 12% on its cash investments. The purchase order lead time is one week.

The following cost data are available:

Relevant ordering costs per purchase order                                       $125.00

Relevant insurance, materials handling, breakage, etc., per year               $0.77

Question 1) If Garry's Golf Supplies makes an order (1/12 of annual demand) once per month, what are the relevant total costs?

Question 2) What is the economic order quantity for Garry's golf ball purchases?

Question 3) Purchasing at the EOQ recommended level, how many deliveries will be made to Garry's Golf Supplies during each time period?

Question 4) Purchasing at the EOQ recommended level, what are the relevant total costs?