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A grocery store orders paper grocery bags from a distributor. The store uses about 2,300 cases of bags per year, and its ordering cost is $65 per order. The store's carrying cost rate is 35% of acquisition cost. The distributor has the following pricing structure for cases of bags: 1-49 cases, $129.95 per case; 50-249, $127.95; 250-999, $126.95; 1000+, $125.95.

a. How many cases of bags should the store order each time?

b. What would be the resulting total inventory cost per year (ordering plus carrying plus materials)?

c. How many orders per year should be expected?

d. What is the expected maximum inventory level of paper bags (in cases)?

e. If the store has only enough storage space for 200 cases of bags, how many should it order each time?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M91628827

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