Meyer Stores carries a specialty line of flavored syrups. One of the most popula

Question

Meyer Stores carries a specialty line of flavored syrups. One of the most popular of these is raspberry syrup which sells, on average, 30 bottles per week. Meyer's cost is $7 per bottle. Meyer has determined its order cost to be $56 and inventory carrying cost is 20 percent. Meyer is open for business 52 weeks per year. a. What is the EOQ for raspberry syrup? (Round up your answer to the next whole number.) EOQ units b. If Meyer orders the EOQ quantity each time, what will be the inventory turnover rate for raspberry syrup? (Hint: Inventory turnover Annual sales in units / Average inventory in units.) (Round your answer to 2 decimal places.) nventory turnover rate times per year

Explanation / Answer

a)

D, Annual Demand = 30*52

S = Order Cost = 56$

H = Holding Cost = 0.2*7 = 1.4$

EoQ, Q = sqrt(2*D*S/H) = sqrt(2*30*52*56/1.4) = 353.27

b)

ITR = Annual Sales/Avg Inventory = 30*52/Avg Inventory

Avg Inventory = Q/2

So, ITR = 30*52/176.63 = 8.83

Hope this helps and Please don't forget to like the answer :)

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