Sims Hardware sells wood pellets used in heating stoves and slow-cook grills. The supplier for the pellets
Fantastic news! We've Found the answer you've been seeking!
Question:
Sims Hardware sells wood pellets used in heating stoves and slow-cook grills. The supplier for the pellets pays all incoming freight. Following is detailed data collected regarding pellet inventory needs:
Annual demand for wood pellets | 65,000 lbs. |
Ordering cost per purchase order | $120 |
Carrying cost per year | 15% of purchase costs |
Safety-stock requirements | none |
Cost of wood pellets | $4 per 40 lb bag |
The purchasing lead time is three weeks. Sims Hardware is open 240 days a year (48 weeks for 5 days a week).
Required:
- Calculate the EOQ for wood pellets.
- Calculate the number of orders that will be placed each year.
- Calculate the reorder point for wood pellets.
Related Book For
Accounting concepts and applications
ISBN: 978-0538745482
11th Edition
Authors: Albrecht Stice, Stice Swain
Posted Date: