Question
The Home and Garden (HG) chain of superstores imports decorative planters from Italy. Demand for the planters is stable and averages at 150/week. Each planter
The Home and Garden (HG) chain of superstores imports decorative planters from Italy. Demand for the planters is stable and averages at 150/week. Each planter costs $10. HG incurs a holding cost of 30% per year to carry inventory. HG has an opportunity to set up a superstore in the Phoenix region. Each order shipped from Italy incurs a fixed transportation and delivery cost of $5000. Consider 50 weeks in the year. Suppose HG uses the economic order quantity (EOQ) model to make ordering decisions. Then theaverage inventorythat HG carries for the year would be
A) 5000
B) 2500
C) 3750
D) 7500
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