What is the optimal order quantity for rice at the trader

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Reference no: EM133771976

Question

A commodities trader sees demand for rice of 20000 lbs per month. The rice is procured for $0.5 per lb. The holding cost per lb per month of rice is 20% of the cost per lb of the grain The fixed order cost is $300 per order. What is the optimal order quantity for rice at the trader? What is the average inventory of rice at the trader? What is the total cost of the economic order quantity policy at the trader (just consider the inventory holding cost per month and the fixed order cost per month)?

Reference no: EM133771976

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