Determine wal-marts economic order quantity

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Reference no: EM13786296

The demand for spring water at the SLC Wal-Mart is 500 liters per week. The setup cost for placing an order to replenish inventory is $20. The order is delivered by the supplier which charges Wal-Mart $0.10/liter for the cost of transportation from the Rocky Mountains to SLC. This transportation cost increases the cost of water to $1.25/liter. The water loses its freshness while stored at the SLC Wal-Mart. To account for this, the Wal-Mart charges an annual holding cost of $2.5/liter. Assume that there are 52 weeks a year.

Determine Wal-Mart’s Economic Order Quantity (in liters)? How often should Wal-Mart order for water (in weeks) when Wal-Mart orders its economic order quantity computed in Q11 each time it places an order?

Reference no: EM13786296

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