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A wholesale store buys 3000 of their most popular coffee mugs each month. The cost of ordering and receiving shipments is $12 per order. Accounting estimates annual carrying costs are $3.60. The supplier lead time is 12 operating days. The store operates 240 days per year. Each order is received from the supplier in a single delivery. There are no quantity discounts.

Use 2 decimal places in your calculations (if needed) and then round your final answer to the closest whole number.

Answer :

jepessoa

Answer:

the requirements are missing, but I assume that you need the EOQ and other aspects related to inventory management:

Economic order quantity (EOQ) = √(2SD/H)

S = ordering cost = $12

D = annual demand = 3,000 x 12 = 36,000

H = annual holding cost per unit = $3.60

EOQ = √[(2 x $12 x 36,000) / $3.60] = √240,000 = 489.9 ≈ 490 units per order

total number of orders per year = 36,000 / 490 = 73.47 orders per year (since we assume that the company will keep working in the future, we can use decimals or fractions in this case)

total ordering costs per year = 73.47 x $12 = $881.64

total holding cost per year = (490/2) x $3.60 = $882

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