Management at admore farm and seed has never analyzed the, Ask an Expert

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Management at Admore Farm and Seed has never analyzed the costs associated with their inventory policy, and they currently have a large stock of insecticide in the warehouse. They estimate that it costs $25 to place an order, and it costs $0.25 per gallon to hold the spray. The firm requires 80,000 gallons for the year (assume 365 days). (EOQ- Economic order quantity)

a. Calculate the EOQ

b. Calculate the total cost of inventory implied by the EOQ from a.

c. Calculate the total cost of inventory at the EOQ ± 1,000 gallons

d. If it takes 7 days to receive an order from suppliers, determine the appropriate reorder point.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92659985

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