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Harry's Equine Emporium (HEE) orders ultra-premium grain with nutritional supplements in 100 pound bags for sale to horse farms. HEE's merchandise manager currently purchases
Harry's Equine Emporium (HEE) orders ultra-premium grain with nutritional supplements in 100 pound bags for sale to horse farms. HEE's merchandise manager currently purchases 144 bags of grain per order. HEE sells an average of 42 bags of this grain each week and operates 52 weeks per year. Per a new contract with its supplier, HEE will pay $65 per bag of grain. HEE's cost accountants have studied its historical data and estimated annual holding cost to be 25 percent of the purchase price and that it costs $35 to process and place an order. What is the optimal order quantity (round to the integer value that results in the lowest total cost)? Use the integer value of the 'optimal' order quantity to answer the following questions. What is the time between orders? What are the total annual costs for the optimal order quantity? If HEE implements the optimal order policy, what annual savings will accrue relative to the current ordering policy? Do not include commas in any of your answers. Economic Order Quantity Time Between Orders Total Annual Costs Savings (Report as an integer value. Round to minimize cost.) (In weeks. Round to two (2) decimal places.) (Round to two decimal places. Do not include $ sign) (Round to two decimal places. Do not include $ sign)
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