The Super Fresh Grocery Store carries a brand of tea with following characteristics:
Sales = 4000 cases per year
Ordering cost = $200 per order
Carrying charge = 20% per year
Item cost = $50
Number of working days per year = 250 days
a. How many cases should be ordered at a time?
b. How often tea will be ordered, i.e., what is the time between orders?
c. What is the annual cost of ordering and carrying tea?
d. What is the effect on EOQ and the total cost if the sales next year are increased by 500 cases and the ordering cost is reduced to $100 per order.