Economic order quantity; safety stock In P2-3, assume that the company desires a safety...

Economic order quantity; safety stock

In P2-3, assume that the company desires a safety stock of 500 gallons.

Required:

1. Compute the average number of gallons in inventory.

2. Compute the total carrying cost.

3. Compute the total order cost. Did it differ from your answer in P2-3?

Reference: P2-3

Economic order quantity; tabular computation

Chavez Chemical Inc. requires 20,000 gallons of material annually; the cost of placing an order is $20; the annual carrying cost per gallon is $5.

Required:

Determine the EOQ from potential order sizes of 300, 400, 500, 600, 700, and 800 gallons by constructing a table similar to the one appearing on page 71.

Reference: