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Carmen’s fruitcakes must be baked, must be drowned in brandy and sit for four weeks before...

Carmen’s fruitcakes must be baked, must be drowned in brandy and sit for four weeks before being drowned again in brandy a second time before it is sold. Each fruitcake requires a cup of brandy for each marination. If brandy comes in gallon jugs, what is the economic order quantity if Carmen sells 233 fruitcakes every 4 weeks? The gallons of brandy costs $400 each, and have a holding cost of 0.2% per 4 weeks for insurance against shrinkage. Setup costs are $30 per order. Answer in whole units and show your calculations.
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Answer #1

Demand = D = 233/ four weeks
Setup/Ordering Cost = Co = $30
Holding Cost = Cc = 0.2% of $400 = $0.8
Economic Order Quantity Q* = √(2DCo/Cc) = √(2*233*30*/0.8) = 132.19 = 132

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