Compute optimal order quantity and average inventory

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Reference no: EM13108467

A grocery store needs to sell 3,000 cartons of 2L 2% milk per month. The sales is relatively constant throughout the month. The owner of this grocery store purchases milk from a supplier 50 miles away for $2 per carton, and it takes a day to restock. The holding cost per carton per month is $1.5, and the ordering cost per order is about $18.5 including labor, gas and depreciation. Consider a month of 30 days.

The optimal order quantity is about cartons of milk, and the average inventory is about cartons. (Please round to the closest integer and include no units.)

Given the optimal order quantity calculated above, if the average inventory is 136 cartons, then the monthly holding cost is dollars, and the total cost including the cost of supply, holding and ordering is dollars.

The reorder point is cartons.

Reference no: EM13108467

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