Question 9 [73610] During the year (360 days), Dutch Farms sells 2,160 cases of

Question

Question 9 [73610] During the year (360 days), Dutch Farms sells 2,160 cases of cheese. Due to spoilage, Dutch Farms estimates that it costs the firm $12.50 per year to store a case of cheese. The cost to place an order runs about $15. The desired service level is 98 percent. The lead time is one day. Which of the following statements is accurate? Answer a. The EOQ is 72 which will require about 1 order per 12 days. b. The EOQ is 84 which will require about 1 order per 15 days. c. The EOQ is 54 which will require about 2 orders per month. d. The EOQ is 60 which will require about 1 order per 10 days. e. The EOQ is 40 which will require about 2 orders per month.

Explanation / Answer

Economic order quantity is ={2(F*D)/C}^(1/2) where,C=Carrying cost per unit per year F=Fixed cost per order D=Demand in units per year C=$12.5 D=0.98*2160=2116.8 F=$15 Substitute in above eqn. EOQ=71.27==> around 72 Hence answer is option (a) Please Rate

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.