PharmaMart sells 100,000 boxes of a drug, Zapacal, annually. Each box costs $90 each. Costs to prepare and receive each shipment are estimated to be $30 per shipment. The Supplier charges a shipping and handling fee of $100 per shipment. To ensure that the shipment meets quality, each shipment is tested at a cost of $50. The carrying costs (utilities and cost of financing) to store the inventory in the warehouse is estimated to be $2.4 per box.

What is the Economic Order Quantity (EOQ)?

2. Big Retailer sells 365,000 bags of grain a year and has an EOQ of 30,000 bags. If the lag time between ordering a shipment and receiving a shipment is 7 days and management also wants 1 day of safety stock. What should be the Order Point? answer

3. A bank makes a 8% $100,000 discount loan for one year. What is the real effective interest rate (to 2 decimals) on the loan. answer