What is the economic order quantity for organic hummus

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Reference no: EM133468612

Assignment: EOQ&EPQ

Andronico's in the financial center is open 300 days a year. They sell Organic Hummus; and sales are approximately normally distributed with an average of 100 tubs/day and a standard deviation of 25 tubs/day. The wholesale cost is $1.80/tub, and they calculate their annual holding costs by using 20% of the wholesale cost. Orders cost $50 to place, regardless of number of tubs ordered and take 4 days to arrive.

Question A. What is the economic order quantity (EOQ) for Organic Hummus?

Question B. What are total annual cycle-stock holding costs for Organic Hummus?

Question C. What are the total annual fixed order costs for Organic Hummus?

Question D. Now Andronico's has decided to save money and manufacture their own Hummus in-house, with a production rate of 600 tubs/day, their setup cost would only be $7.50/run, and their annual holding cost would be $0.20/tub, but all other parameters remain unchanged. What is the Economic Production Quantity?

Reference no: EM133468612

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