Q1) Scrumptious Spices produces special blend of beef marinade. Company purchases one of the spices used in marinade in 10-pound bags which cost $5 each. Company uses 50,000 of bags per year, and usage happens evenly throughout the year.Average cost to carry 10-pound bag in inventory per year is $1. Cost to place order is $12. Find out economic order quantity for spice in terms of 10 pound bags.
If company works 250 days per year, on average how many bags of spice are used per working day?
If lead time for an order is normally five working days, find out the reorder point.
If company normally carries 50 bags as safety stock, find out the reorder point for the spice.