Question

Question 15 0.25 pts Spring Water (Q15-Q17) The demand for coconut water at SLC Walmart is 600 gallons per week. The setup cost for placing an order to replenish inventory is $25. Orders are delivered by the supplier, who charges SLC Walmart $3/gallon for coconut water. Coconut water loses its freshness when stored, and SLC Walmart incurs an annual holding cost of $2.6/gallon. Assume that there are 52 weeks a year. Q15) Determine SLC Walmart's Economic Order Quantity in [gallons).

Answer 1

Economic Order Quantity is the number of unit that is added to the inventory which minimize the total inventory cost. It maintain a balance between ordering costs and carrying costs.

Question 15 d = 600 gallons/weat. S = $25 order cast = 93/gallon H = $26 /gallon/year n = 52 weeks D=dxn = 600 x 52 weeks - 31200 gallons EOG = /2DS 12 x 31200 x 25 V 2.6 : 774.596 or 775 gallons