Swedish Chef has been selling meatballs at a rate of 248,905 kilograms meatballs annually. The Chef...
Swedish Chef has been selling meatballs at a rate of 248,905 kilograms meatballs annually. The Chef procures his meatballs locally for $11.82 per kilogram. It costs the Chef $230.31 in labor and paperwork to place an order. The holding costs are based on 23.94 percent annual interest rate. What is the time between placement of orders, in month?
Homework Answers
Answer: 0.31 months ,
Explanation: to minimize it annual holding and annual order cost, Swedish chef should order according to EOQ
| Months per year= |
12 |
||
| Annual demand, D= | 248,905 | ||
| cost per order | $230.31 | ||
| item cost | $11.82 | ||
| holding cost percent | 23.9% | ||
| holding cost per year= | holding cost percent*item cost | $2.83 | |
| EOQ= | SQRT(2*Cost per order*D/holding cost per year) | 6365.3 | |
| #orders per year = | Annual demand/ordered quantity | 39.10 | |
| Answer | order cycle= | Month per year/orders per year | 0.31 months per order |
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