Andronico’s in the financial center is open 300 days a year. They sell Organic Hummus; and sales are approximately normally distributed with an average of 100 tubs/day and a standard deviation of 25 tubs/day. The wholesale cost is $1.80/tub, and they calculate their annual holding costs by using 20% of the wholesale cost. Orders cost $50 to place, regardless of number of tubs ordered and take 4 days to arrive
What is the economic order quantity (EOQ) for Organic Hummus?
What are total annual cycle-stock holding costs for Organic Hummus?
What are the total annual fixed order costs for Organic Hummus?
Now Andronico’s has decided to save money and manufacture their own Hummus in-house, with a production rate of 600 tubs/day, their setup cost would only be $7.50/run, and their annual holding cost would be $0.20/tub, but all other parameters remain unchanged. What is the Economic Production Quantity?