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EOQ – Economic (Optimum) Ordering Quantity

by | Nov 29, 2023 | Posted Questions

EOQ – Economic (Optimum) Ordering Quantity

Green Thumb Garden Centers sell 240,000 bags of lawn
fertilizer annually. The optimal safety stock (which is on hand initially) is
1,200 bags. Each bag costs Green Thumb $4, inventory carrying costs are 20
percent, and the cost of placing an order with the firm’s supplier is $25.

A) What is the economic ordering quantity?

B) What is the maximum inventory of fertilizer?

C) What will Green Thumb’s average inventory be?

D) How often must the company order bags of fertilizer?
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