Wilshire farms uses 6000 pounds per year of a special feed


Wilshire Farms uses 6000 pounds per year of a special feed supplement that costs $5 per pound. The supplement’s supplier offers a two percent discount (to $4.90 per pound) if it is ordered in quantities of 3000 pounds or more at a time. It costs $100 to place and receive an order. Wilshire uses an inventory carrying charge of 40 percent of the supplement’s per pound value per year. Perform a cost analysis to determine whether Wilshire should use the economic order quantity (EOQ) or should order a quantity (that is not an EOQ) to take advantage of the discount. If Wilshire should use an order quantity to take advantage of the discount, what is this order quantity?

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Operation Management: Wilshire farms uses 6000 pounds per year of a special feed
Reference No:- TGS01509225

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