The RedClay Garden Store stocks a profitable line of fertilizers that sell for $9.5 for a 50 pound bag. The lead time to order the fertilizer is 3 weeks. The demand is pretty steady and the weekly sales are 1,200 bags. The holding cost for the fertilizer is 30% a year. The fixed cost to order the fertilizer is $100. The cost to RedClay of a bag of fertilizer is $4. The store is open 52 weeks a year. There is no opportunity cost of money considered. RedClay currently orders 10,000 bags at a time.
1. Currently, what is the annual cost of holding a single bag of fertilizer in stock?
2. What is the current total annual cost of ordering fertilizer for RedClay Garden Stores? MGT 3900-005 HW Assignment #5, Page 2 of 3 Due Feb. 25
3. What is the current total annual holding cost of fertilizer at the RedClay Garden Stores?
4. What is the current total annual cost of ordering and holding fertilizer at the RedClay Garden Stores?
5.What is the economic order quantity for RedClay’s order of fertilizer?
6. What is the ROP (reorder point) for RedClay’s order of fertilizer? MGT 3900-005 HW Assignment #5, Page 3 of 3 Due Feb. 25
7. What will the current total annual cost of ordering and holding fertilizer be at the RedClay Garden Stores if you use the EOQ?
8. Complete the table below using the data provided above and then create a line graph that shows the relationship of costs to order quantity. Order Quantity Inventory Holding Cost Ordering Cost Total Cost.