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The Wheatie Cereal Inc buys 10.4 million tones of wheat annually. The wheat is purchased in multiples of 20,000 tonnes. Ordering costs, including removal costs,
The Wheatie Cereal Inc buys 10.4 million tones of wheat annually. The wheat is purchased in multiples of 20,000 tonnes. Ordering costs, including removal costs, are $10,000 per order. Annual carrying cost are 2% of the purchase price per tonne of $500. A safety stock of 300,000 tonnes is maintained. Compute the economic order quantity (EQC) and the level of inventory at which The Wheatie Cereal need to place an order to prevent using the safety stock
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