What factors might cause the firm to order a larger or smaller amount than the EOQ?What is the annual cost of ordering and carrying tea?

OPERATIONS requires the use of quantitative methods to ensure processes are effectively managed. This week we look at several measuring opportunities:

Economic Order Quantity (EOQ)
Bill of Materials (BOM)
Profit Leverage Effect

Chapter 14: Problem 1 (Problems Section: pg. 317-318) Always Fresh Grocery…..
Chapter 15: Problem 4 (Excel template) (Problems Section: pg. 344)Old Hickory….
Chapter 17: Problem 1 (Problems Section: pg. 394) A manufacturing company…….

This is an individual assignment. Please use Excel to complete your quantitative problems

1. The Always Fresh Grocery Store carries a particular brand of tea that has the following characteristics: Sales = 8 cases per week Ordering cost = $10 per order Carrying charge = 20 percent per year .
Item cost = $80 per case a. How many cases should be ordered at a time?

b. How often will tea be ordered?

c. What is the annual cost of ordering and carrying tea?

d. What factors might cause the firm to order a larger or smaller amount than the EOQ?

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