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A store sells a brand of olive oil of 400 bottles per month. The cost of each bottle is $4.85 , and the cost of placing an order is $10.00. Assuming the holding costs are based on a 20% annual interest rate, and stock-outs are not allowed,
a) What is the optimal lot size they should order and what is the time between orders of this product?
b) If lead time is 2 weeks to get the product to the store, what is the reorder point based on the on-hand inventory?
c) If it sells for $5.99, what is the annual profit (excluding overhead and labor costs) from this item?
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An analysis of the holding costs, including the appropriate annual holding cost rate.
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A number of drivers of change have transformed the roles, functions and responsibilities of an operations manager over recent years. These drivers have not only been based on technological innovations but also on the need for organisations to develop..
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