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Pets World is a retailer of a popular blend of organic dog food produced by Natural Pets Company. On average, Pets World sells 600 cans
Pet’s World is a retailer of a popular blend of organic dog food produced by Natural Pets Company. On average, Pet’s World sells 600 cans per week. The wholesale price that Natural Pets Company charges to retailers like Pet’s World is $0.50 per can, and Pet’s World sells it at $1.25 to its customers. In addition, National Pets Company charges to all retailers $60 shipping and handling fees for each order delivery. Last year, National Pets Company announced that they decided to sell and deliver ONLY at the multiple of 1,000 cans. (i.e. Pet’s World must order only in the quantities like 2,000, 3,000, etc.) If Pet’s World’s annual (52 weeks) inventory holding cost is 20%, what order size should Pet’s World use to minimize annual holding and ordering costs?
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Step: 1
To determine the optimal order size for Pets World to minimize annual holding and ordering costs we need to use the Economic Order Quantity EOQ model ...Get Instant Access to Expert-Tailored Solutions
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Step: 2
Step: 3
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