Question 2

Red Fish have a distribution centre (DC) in each province in which they store their inventory. They are planning their purchasing for the year and have various items that they need to order. One of the products that they need to order is soy sauce. They usually order cans of three litres each that they then use to fill smaller containers in the restaurants. As refrigerating the soy sauce keeps it fresher for longer, they store it in a refrigerator in their DC, which incurs more costs.

Red Fish usually buy 240 cans of soy sauce in a year. Each can costs R250 and the holding costs add up to R30 a year, while ordering or setup costs amount to R100 per order. Red Fish is open all year round and therefore operates a 365-day year.

Considering this information, calculate the following for Red Fish:

2.1 The optimal order quantity

2.2 The expected number of orders placed each year

2.3 The expected time between orders (Round off to the nearest whole number.)