Red Beans Co. sells a pound or 1 lb of kidney beans per sack. The company's inventory is stored in a climate controlled area. The "holding cost" for each sack is $1.40. The cost to place an order with the various vendors is $35. The lead time is 5 days and Red Beans Co. sells 7,000 sacks of beans per year to its customers. Red Beans Co. uses 250 working days per year.
-What is the optimal order quantity (EOQ)?
-What is the average inventory? Hint: Use the EOQ calculated in #1).
-What is the annual inventory holding cost?
- How many orders would be placed each year?
-What is the annual ordering cost?
-What is the total annual cost to manage the inventory?
-How many days on average are there between orders?
-What is ROP?