Guy’s BBQ Grille in Saskatoon serves 5,000 steaks per year. The steaks are kept in a freezer. The holding cost for each steak is $1.50. The cost to place an order is $45. The lead time is 4 days and there are 250 working days per year.
i) What is the optimal order quantity (EOQ)?
ii) What is the average inventory? Hint: Use the EOQ calculated in i).
iii) What is the annual inventory holding cost?
iv) How many orders would be placed each year?
v) What is the annual ordering cost?
vi) What is the total annual cost to manage the inventory?
vii) How many days on average are there between orders?
viii) What is ROP?