Question: Store managers want an optimal inventory policy. Overstocking results in excessive storage and interest costs, whereas a small inventory means added costs for reordering and

Store managers want an optimal inventory policy. Overstocking results in excessive storage and interest costs, whereas a small inventory means added costs for reordering and delivery. A supermarket manager estimates that a total of 800 cases of soup will be sold at a steady rate during the coming year and it costs $4 to store a case for a year. If he places several orders per year, each consisting of cases, then there will be an average of ½x cases in stock at any time and so storage costs for the year are (½x) 4 = 2x dollars. He also estimates that the handling cost for each delivery is $100. What is the optimal reorder quantity that minimizes costs?

Step by Step Solution

★★★★★

3.42 Rating (161 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

800 If the reorder quantity is then the manager places I ... 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)

M-C-D (484).docx

120 KBs Word File

Students Have Also Explored These Related Calculus Questions!

The firm will have $2,500,000 available for investment during the coming year. The following restrictions apply:- Risk-free securities may not exceed 30% of the total funds, but must comprise at...

What is Websters added cost if it orders 400 units at a time rather than the EOQ quantity? What if it orders 600 units? Andria Mullins, financial manager of Webster Electronics, has been asked by the...

Average delivery time for orders shipped by Manatee Printing to customers in Europe is 6.5 days. You plan to try a new shipping service that promises to reduce that time. You intend to select a...

1. Is the link between the supply chain and marketing important? 2. How is it important for marketers to know about logistics and supply chain? 3. Does today's digital and fast-paced business require...

TANGLEWOOD CASEBOOK for use with STAFFING ORGANIZATIONS 5th Ed. Kammeyer-Mueller 1 TANGLEWOOD CASEBOOK To accompany Staffing Organizations, fifth edition, 2006. Prepared by John Kammeyer-Mueller...

TANGLEWOOD CASEBOOK for use with STAFFING ORGANIZATIONS 7th Ed. Kammeyer-Mueller 1 TANGLEWOOD CASEBOOK To accompany Staffing Organizations, seventh edition, 2012. Prepared by John Kammeyer-Mueller...

TANGLEWOOD CASEBOOK for use with STAFFING ORGANIZATIONS 5th Ed. Kammeyer-Mueller 1 TANGLEWOOD CASEBOOK To accompany Staffing Organizations, fifth edition, 2006. Prepared by John Kammeyer-Mueller...

TANGLEWOOD CASEBOOK for use with STAFFING ORGANIZATIONS th 8 Ed. Kammeyer-Mueller 1 TANGLEWOOD CASEBOOK To accompany Staffing Organizations, eighth edition, 2015. Prepared by John Kammeyer-Mueller...

Spend analysis Stock-keeping unit (SKU) 10 Three-way match Utilization ty Images; @ monsity/ Getty Images Vendor master health care? iency? CHAPTER 17 applied, and what are the steps to fol-...

MBA 280 Fall 2017 Inventory Management Time Frame: Class 5 - Class 6 References: Operations Management Reading: Managing Inventory Simulation: Root Beer Game Played in Class 6, Oct 5th, Check Saclink...

Q2/ Find the Norton equivalent of the circuit in Fig. 2 62 ww 4 A 62

The number of voters (in thousands) in a metropolitan area is given approximately by where t is time in years. Find the average number of voters during the period from t = 0 to t = 10. (500 23e f(t)...

7. The World Trade Organization What is the World Trade Organization (WTO) and how does it help foster multilateral trade? (Check the WTO Web site at http://www.wto.org/.)

Your company is considering two mutually exclusive projects, X and Y, whose costs and cash flows are shown below: The projects are equally risky, and their cost of capital is 12 percent. You must...

Braxton Inc. is considering the write-off of a limited life intangible because of its lack of profitability. Explain to the management of Braxton how to determine whether a write-off is permitted.

An aqueous slum? at 30?C containing 20.0 wt% solids is fed to an evaporator in which enough water is vaporized at 1 atm to produce a product slurry containing 35.0 wt% solids. Heat is supplied to the...

Presented below is the partial bond discount amortization schedule for Morales Corp. Morales uses the effective-interest method of amortization. Instructions(a) Prepare the journal entry to record...

When the sun is either rising or setting and appears to be just on the horizon, it is in fact below the horizon. The explanation for this seeming paradox is that light from the sun bends slightly...

What might some of the negatives of deregulation be?

Flip Bonner has just been awarded a $3,100,000 settlement in as personal injury lawsuit against his former employer, Central Manufacturing. The settlement agreement gave Mr. Bonner an immediate...

November 2021 Question 3 2 pts Home Syllabus (CO 3) Consider the following table: Announcements Defects in batch Probability Devry Webex 0 0.04 Modules 1 0.11 Discussions 2 0.25 People 3 0.20 Files 4...

Hello, can someone help me with this please. (3) Which of the following is NOT considered an essential component of a. MDP? i. Decision Epochs ii. Histogram iii. States iv. Actions v. Transition...