Analyze the following scenario: Meals for the Homeless buys 30,000large cans of green beans each year. The cost of each can ofbeans is $4. The cost to place an order for beans, includingthe time of the employee placing the order, shipping, and so forth,comes to $20 per order. The out-of-pocket carrying costs (forstorage, etc.) are $0.30 per can per year. In addition, Mealscalculates its interest at 5 percent. How many cans should beordered at a time? How many orders should there be eachyear? What are the total ordering costs and carrying costs atthe EOQ? Contrast the total of the ordering costs andcarrying costs at EOQ to the total ordering and carrying costs ifthe cans were all ordered at the beginning of the year. (Youwill need to read and understand Appendix 7-A to complete thisdiscussion). Clearly label the calculations of the economicorder quantity using Excel (you may attach your Excel worksheet toyour discussion post in your online classroom). Use formulasto calculate the EOQ and format the cells to insert a comma ifthere is more than three numbers. Round to the nearest wholenumber. Explain the advantages and disadvantages of EOQ in aWord document not to exceed 200 words. You must respond to atleast two of your classmates’ postings to receive full credit.
ScholarMatic: Explanation & Answer
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