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Determine how often Jana Company should order

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Question - The demand for product M2 at Jana Company is 600 KG per week. The setup cost for placing an order to replenish inventory is $25. The order is delivered by the supplier which charges $0.10/KG for the cost of transportation. This transportation cost increases the cost of M2 to $1.25/KG. M2 loses its freshness while stored at the Jana Company warehouses. To account for this, the Jana Company charges an annual holding cost of $2.6/KG.

Required - Determine how often Jana Company should order for M2 and what size each order should be.

Reference no: EM132529686

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