Ardmore Farm and Seed has an inventory dilemma. It has been selling a brand of v

Question

Ardmore Farm and Seed has an inventory dilemma. It has been selling a brand of very popular insect spray for the past year. It has never really analyzed the costs incurred from ordering and holding the inventory and currently faces a large stock of the insecticide in the warehouse. Ardmore estimates that it costs $25 to place an order and $0.25 per gallon to hold the spray. The annual requirements total 80,000 gallons for a 365-day year. Ardmore Farm and Seeds new treasurer has suggested that the inventory decision should include consideration of the firm

Explanation / Answer

The optimal order quantity after assesing the situation in the case is 3000 gallons per day

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