A grocery store needs to sell 3,000 cartons of 2L 2% milk per month. The sales i
ID: 1178509 • Letter: A
Question
A grocery store needs to sell 3,000 cartons of 2L 2% milk per month. The sales is relativiely constant throughout the month. The owner of this grocery store purchases milk from a supplier 50 miles away for $2 per carton. It takes a day to restocl. The holding cost per carton per month is $1.5, and the ordering cost per order is $18.5 including labor, gas and depreciation. Consider a month of 30 days.
The optimal order quantity is about____ cartons of milk, and the average inventory is about ___ cartons.
Given the optimal order quantity calculated above, if the average inventory is 136 cartons, then the monthly holding cost is ____ dollars, and the total cost including the cost of supply or the total unit cost for all units, holding and ordering is___ dollars.
The reorder point is ___ cartons.
Explanation / Answer
A grocery store needs to sell 3,000 cartons of 2L 2% milk per month. The sales is relativiely constant throughout the month. The owner of this grocery store purchases milk from a supplier 50 miles away for $2 per carton. It takes a day to restocl. The holding cost per carton per month is $1.5, and the ordering cost per order is $18.5 including labor, gas and depreciation. Consider a month of 30 days.
The optimal order quantity is about____ cartons of milk, and the average inventory is about ___ cartons.
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The optimal order quantity is about 192 cartons of milk, and the average inventory is about 96 carton -------------ANSWER
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Given the optimal order quantity calculated above, if the average inventory is 136 cartons, then the monthly holding cost is ____ dollars, and the total cost including the cost of supply or the total unit cost for all units, holding and ordering is___ dollars.The reorder point is ___ cartons
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Holding Cost = PFQ/2 = (2*1.5*136/2) = $204 ---------- ANSWER
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Total Cost = Purch Cost + Ordering cost + Carrying cost
= PR + CR/Q + PFQ/2
= (2x 3000) + (18.50x 3000)/192 + (2x 1.5*136)/2 = $6,493---------- ANSWER
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monthly holding cost is $204 dollars, and the total cost including the cost of supply, holding and ordering is $6493 dollars---------- ANSWER
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ROP =(Demand per day)
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