Question
Problem 2: The next two questions use the following information. A grocery store uses 600 boxes of plastic bags per month. The boxes cost
Problem 2: The next two questions use the following information. A grocery store uses 600 boxes of plastic bags per month. The boxes cost $30 each, placing an order for plastic bags costs $20, and holding costs are $5 per box per month. Using the basic EOQ model, what are: a) The economic order quantity? b) The average inventory level? c) The total monthly holding cost? d) The total monthly ordering cost? Problem 4: A manufacturer produces pencils, which it sells for $20 each. The production rate is 500 per day. The monthly demand for pencils is 1800 (and so usage per day is 60). Setup cost is $80 and holding cost is $1.2 per pencil per month. What are: a) The economic production quantity? b) The average inventory level? c) The total monthly holding cost? d) The total monthly setup costs?
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