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EOQ - Economic (Optimum) Ordering Quantity

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.

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