Question
A local food processing firm uses (demand) 24,000 glass jars to produce gourmet jams and jellies per year. It costs the firm $60 each time
A local food processing firm uses (demand) 24,000 glass jars to produce gourmet jams and jellies per year. It costs the firm $60 each time it places an order for jars with the manufacturers. The inventory holding cost is $0.8 per jar per year. The stock is received 4 working days after an order has been placed. No backorders are allowed. Because of space limitations, suppose the firm orders 11000 jars at a time. What would be the annual cost saved by shifting from the 11000-jars order policy to the EOQ? (Please round your calculations to the nearest whole number.)
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