MGMT 64900 : InventoryReviewProblems09.doc
Document Summary
Eoq: a specialty coffeehouse sells colombian coffee at a fairly steady rate of 280 pounds annually. The beans are purchased from a local supplier for . 40 per pound. The coffee house estimates that it costs in paperwork and labor to place an order for the coffee, and holding costs are based on a 20 percent annual interest rate. The time between placements of orders is: a large automobile repair shop installs about 1,250 mufflers per year, 18 percent of which are for imported cars. (assume a very steady demand rate. ) All of the imported-car mufflers are purchased from a single local supplier at a cost of . 50 each. The shop uses a holding cost based on a 25 percent cost of capital. The fixed cost for placing an order is estimated to be . The annual cost of ordering (not including the purchase cost) is.
