Green Thumb Garden Centers sell 240,000 bags of lawn fertilizer annually. The optimal safety stock (which is on hand initially) is 1,200 bags. Each bag costs Green Thumb $4, inventory carrying costs are 20 percent, and the cost of placing an order with the firm's supplier is $25.

A) What is the economic ordering quantity?
B) What is the maximum inventory of fertilizer?
C) What will Green Thumb's average inventory be?
D) How often must the company order bags of fertilizer?

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Green Thumb Garden Centers sell 240,000 bags of lawn fertilizer annually. The optimal safety stock (which is on hand initially) is 1,200 bags. Each bag costs Green Thumb $4, inventory carrying costs are 20 percent, and the cost of placing an order with the firm's supplier is $25.

A) What is the economic ordering quantity?
B) What is the maximum inventory of ...

Solution Summary

Word document contains the economic ordering quantity, the maximum inventory of fertilizer, average inventory.

Annual demand: 2500
Holding cost per bracket per year: $1.50
Order cost per order: $18.75
Lead time: 2 days
Working days per year: 250
Please answer the following questions:
A. What is the Economic Order Quantity (EOQ)?
B. Given the EOQ: What is the annual inventory holding cost?
C. Given the EOQ: What would be the

A large bakery buys flour in 25-pound bags. The bakery uses an average of 4,860 bags a year. Preparing an order and receiving a shipment of flour involves a cost of $10 per order. Annual carrying costs are $75 per bag.
a) Determine the economic order quantity.
b) What is the average number of bags on han

A company will begin stocking remote control devices. Expected monthly demand is 800 units. The controllers can be purchased from either supplier A or supplier B. Their price lists are as follows.
Supplier A
Quantity/Unit Price
1-199 / $14
200-499 / $13.80
500+ / $13.60
Supplier B
Quantity/Unit Price
1-149 / $14

Tiger Corp purchases 1,200,000 units per year of one component. The fixed cost per order is $25. The annual carrying cost of the item is 27% of its $2 cost.
a) Determine the EOQ under each of the following conditions: (1) no changes, (2) order cost of zero, and (3) carrying cost of zero.
b) What do your answers illustrate

The EOQ model has a number of assumptions. List them and explain whether they are readily attainable. For example, will the adjustment for quantity discounts easily work?

What is EOQ is, where did it come from, and what all the numbers mean.
How to determine what goes into Order Cost.
How to determine what goes into Carrying Cost.
What can go wrong in calculating EOQ.

Suppose that you are the manager of a production department that uses 400 boxes of rivets per year. The supplier quotes you a price of $8.50 per box for an order size of 199 boxes or less, a price of $8.00 per box for orders of 200 to 999 boxes, and a price of $7.50 per box for an order of 1,000 or more boxes. You assign a holdi

Analyze the following scenario: Meals for the Homeless buys 30,000 large cans of green beans each year. The cost of each can of beans is $4. The cost to place an order for beans, including the time of the employee placing the order, shipping, and so forth, comes to $20 per order. The out-of-pocket carrying costs (for storage, et

The Bozo Co is reviewing their inventory management techniques and have come up with the following data on their inventory.
a. annual usage of units $125,000
b.ordering costs if $100 per order
c. carrying cost of 20% of the cost of inventory
d. cost of one unit $110
1. what is the economicorderingquantity?
2. how man