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2) A produce distributor uses 623 packing crates a month, which it purchases at a cost...

2) A produce distributor uses 623 packing crates a month, which it purchases at a cost of $10 each. The manager has assigned an annual carrying cost of 35 percent of the purchase price per crate. Ordering costs are $28. Currently, the manager orders 5 times a month. What is their current ordering quantity? Round to the nearest integer. Note: Assume that the demand rate is constant, and shortages are not allowed.

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Answer #1

Answer;

Monthly Usage = 623 crates

Orders placed 5 times a month

Therefore, current ordering Quantity = 623/5 = 124.6 = 125 (rounded)

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