Question

Consider the following Information for questions 33 38 : The manager of the Quick Stop convenience store ( which never closes ) sells six cases of Sierra Nevada Torpedo day Order costs are $ 10.14 per order and Torpedo beer costs $ 3.60 per six pack ( ordered in full cases and each case of beer contains four six packs ) . Orders arrive two days from the time they are placed . Daily holding costs are equal to 5 percent of the cost of the beer . ( ) she were to order the economic quantity for Torpedo beer what would be the daily total Inventory casts ( holding and ordering costs , but EXCLUDING the cost of the beer )

Answer 1

Answer:

$178.82

Explanation:

First Calculate the Economic Order Quantity

Economic Order Quantity = √2×Annual Demand×Ordering Costs / Holding Cost

                                           = √2×6×4×365×$ 10.14/$ 3.60×5%

                                           = 994

Then Calculate the Total Inventory costs

total Inventory costs = ordering Costs + Holding Costs

                                  = (6×4×365)/994×$ 10.14 + 994/2 ×($ 3.60×5%)

                                  = $89.36 + $89.46

                                  = $178.82