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Gailey Ltd. is a distributor of ear pod sets. P Mart is a local retail outlet which sells ear pod sets. P Mart purchases ear
Gailey Ltd. is a distributor of ear pod sets. P Mart is a local retail outlet which sells ear pod sets. P Mart purchases ear pod sets from Gailey Ltd. at $29.00 per ear pod set. Ear pods are shipped in packages of 70. Gailey Ltd. pays all incoming freight, and P Mart does not inspect the ear pods due to Gailey's reputation for high quality. Annual demand is 350,000 ear pods at a rate of 6,730 ear pods per week. P Mart earns 11% on its cash investments. The purchase-order lead time is one week. The following cost data are available:
Relevant ordering costs per purchase order $115.50
Carrying costs per package per year:
Relevant insurance, materials handling,
breakage, etc., per year $6.50
What is the economic order quantity?
a.
64 packages
b.
79 packages
c.
71 packages
d.
63 packages
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