Purchase Solution

EOQ - Economic (Optimum) Ordering Quantity

Not what you're looking for?

Ask Custom Question

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?

Purchase this Solution
Solution Summary

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

Solution Preview

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 ...

Purchase this Solution
Free BrainMass Quizzes
Cost Concepts: Analyzing Costs in Managerial Accounting

This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.

Organizational Behavior (OB)

The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.

Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.

SWOT

This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.

Business Processes

This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.

View More Free Quizzes
Related BrainMass Solutions

  • Economic Order Quantity Model

    = Square root (2 C1 C3 r) = $3,500 Optimum number of orders = r/EOQ = 35000/ 10000 = 3.5 Optimal time between orders = EOQ / r = 10000/ 35000 = 0.2857 years Economic Order Quantity Model is applied.

  • Inventory, Economic Quantity Model

    Answer: Given the following information: Demand per year D = 235,000 yards per year Ordering cost S = $250/order Carrying cost H = $1.65/yard/year Economic Order Quantity = EOQ =Sqrt((2SD)/H) = 8438.73 yards Minimum total annual inventory cost

  • Inventory model for a Small Bakery

    Using EOQ Economic Order Quantity (EOQ) determines the optimum quantity to order and how many times to order in one year. Specifically, EOQ requires the following data to be present: carrying cost and ordering cost.

  • Inventory Management: Safety Stock, Re-Order, EOQ

    The formula for EOQ is Q* = EOQ= square root of [ (2*D*S)/H ] Q* = Optimum number of pieces per order = EOQ = Economic Order Quantity D = Annual Demand in units for the inventory item = (365 days in year)*(200 units/day) = 73,000 units per year [we

  • Calculating Production Runs

    Ordering cost, C2=$82 per order Economic order quantity = EOQ for LRM = = 392.11 units EOQ for LRM= 392.11 units To calculate the Optimal ordering cost, we need number of orders/year Number of orders/year for EOQ= = 38.25 orders/year Annual

  • Economic Order Quantity

    117922 Economic Order Quantity Quarter ABC Corp. uses 20,000 half inch PVC tubes during a calendar quarter. Ordering costs are $180 per order and carrying costs are $6 per tube per quarter. The economic order quantity is?

  • Calculating the EOQ and various inventory costs

    What is the economic order quantity? EOQ= (2D*Co/Ch)^0.5=(2*4500*150/15)^0.5=300 6. At the economic order quantity level, how many times will orders be placed? Number of orders=D/EOQ=4500/300=15 7.

  • Economic Concepts.

    Economic Order Quantity (EOQ) EOQ model is used (1) for calculating the optimum quantity of products an organization can buy or produce to reduce the cost of carrying inventory and cost of processing purchase orders or production set-ups, (2) as part

  • EOQ - Economic Order Quantity

    648582 EOQ - Economic Order Quantity A wholesale distributor of lenses and frames has been seeking to minimize its inventory costs and is planning to apply the economic order quantity model to its main product, lens blanks.

View More Related Solutions