The Gentry Garden Center sells 90,000 bags of lawn fertilizer annually. The optimal safety stock (which is on hand initially) is 1,000 bags. Each bag costs the firm $1.50, inventory carrying costs are 20%, and the cost of placing an order with its supplier is $15.
a. What is the Economic Ordering Quantity?
b. What is the maximum inventory of fertilizer?
c. What will be the firm’s average inventory?
d. How often must the company order?
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