Basic EOQ model, ROP and EOQ calculation
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Food Town wishes to determine an optimal order policy for Marino brand pasta. The store sells an average of 320 one-pound packages per week. The cost of placing an order is $30, and the annual holding cost rate is estimated to be 14%. The pasta costs the store $.60 per package. Lead time is estimated to be one week, and the store desires a safety stock of 100 packages.
a.How many packages of pasta should Food Town order?
b.At what inventory level should the order be placed?
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Solution Summary
This posting contains one problem on Inventory management concerning calculation of EOQ and ROP.
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