Question: A food processor uses approximately 27,000 non-returnable glass jars a month for its fruit juice product. Because of storage limitations, a lot size of 4,000

A food processor uses approximately 27,000 non-returnable glass jars a month for its fruit juice product. Because of storage limitations, a lot size of 4,000 jars has been used. Monthly holding cost is one cent per jar, and ordering cost is $20 per order.
a, What penalty is the company incurring by using its present order quantity'?
b. The manager would like to justify the present order quantity. One possibility is to simplify order processing to reduce the ordering cost. What ordering cost would enable the manager to justify the current order quantity?

Step by Step Solution

★★★★★

3.46 Rating (156 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

D 27000 jars month Current Q 4000 jars H 01 unit month S 20 p... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

686-B-M-L-O-M (5106).docx

120 KBs Word File

Students Have Also Explored These Related Management Leadership Questions!

A food processor uses approximately 27,000 glass jars a month for its fruit juice product. Because of storage limitations, a lot size of 4,000 jars has been used. Monthly holding cost is 18 cents per...

A food processor uses approximately 29,730 glass jars a month for its fruit juice product. Because of storage limitations, a lot size of 4,000 jars has been used. Monthly holding cost is 18 cents per...

My Kitchen Delights (MKD), a regional producer of gourmet jams and jellies, uses approximately 24,000 glass jars each month during its production. Because of space limitations, MKD orders 5000 jars...

1. A food processor uses an average of 30,000 glass jars a month for its fruit products. Because of storage limitations, a lot size of 4000 jars has been used. Monthly holding cost is 20 cents per...

A food processor uses an average of 30,000 glass jars a month for its fruit products. Because of storage limitations, a lot size of 4000 jars has been used. Monthly holding cost is 20 cents per jar...

A food processor uses approximately 27,000 glass jars a month for its fruit juice products. Because of storage limitations, a lot size of 4000 jars has been used. Monthly holding cost is $0.18 per...

3 . a ) A food processor uses approximately 4 0 , 0 0 0 glass jars a month for its fruit juice product. Because of storage limitations , a lot size of 5 , 0 0 0 jars has been used. The monthly...

On February 3, Dependable Repair Service extended an offer of $80,000 for land that had been priced for sale at $90,000. On March 6, Dependable Repair Service accepted the seller's counteroffer of...

Define ERP and describe its functionalities?

Paying for Drayage is always required of tradeshow exhibitors because that is the only way to get the materials and display to the booth. True Falsen

Nick Spanos Antiques issued its 7%, 20-year bonds payable at a price of $168,520 (face value is $200,000). The company uses the straight-line amortization method for the bond discount or premium....

Describe infinite loading.

Explain how finite loading is done.

Explain the benefits of finite loading.

You have just completed the first year of operation for your business and have the following information: sales, $200,000; cost of goods, $140,000; rent, $18,000; utilities, $8,400; insurance,...

Derek will deposit $1,789.00 per year into an account starting today and ending in year 21.00. The account that earns 8.00%. How much will be in the account 21.0 years from today? Attempts Remaining:...

Risky Business wants to know the payback period, NPV, IRR, MIRR, and Pl of this project. The appropriate discount rate for the project is 13%. If the cutoff period is 6 years for major projects,...