Identify the appropriate inventory model to obtain the optimal lot size for the given problem description A produce distnibutor uses 800 packing crates a month, which it purchases at a cost of $10 each. The manager has assigned an annual carrying cost of 35 percent of the purchase price per crate, Ordering costs are $28. Select one O a. Fixed Order Interval 。c.ROP d. Single Period e. None of the listed O
Expert Answer
The answer is Option b : EOQ ie Economic Order Quantity
Monthly Demand = 800 crates/ month
Annual Demand = D = 12*800 = 9600 crates/ year
Purchase
OR
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