The Always Fresh Grocery Store carries a particular brand of tea that has the following characteristics:
Sales = 8 cases per week
Ordering cost = $10 per order
Carrying charge = 20 percent per year
Item cost = $80 per case
a. How many cases should be ordered at a time?
b. How often will tea be ordered?
c. What is the annual cost of ordering and carrying tea?
d. What factors might cause the firm to order a larger or smaller amount than the EOQ?