A Local Ice Cream Shop Sells 10,000 Cones of Vanilla-Flavored

question 39

Essay

A local ice cream shop sells 10,000 cones of vanilla-flavored ice cream each year.The cones are ordered from an outside supplier and it takes 5 days for each shipment of cones to arrive.Ordering costs are estimated at $15 per order.Carrying costs are $5 per cone per year.Assume that the ice cream shop is open 250 days a year.
a.What is the optimal EOQ for ice cream cones?
b.What is the total cost of ordering and carrying the ice cream cones?
c.What is the maximum inventory of cones held in a given ordering cycle?
d.What is the average inventory held in a given ordering cycle?
e.What is the reorder point (ROP)?

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Definitions:

Unauthorized Completion

The act of finishing or filling out a document or contract without the explicit authorization or consent of all parties involved.

Material Alteration

A significant change to a document or agreement that affects its legal obligations or rights.

Unauthorized Acquisition

Obtaining assets, data, or information without permission from the rightful owner or authority, which may involve breaches of security or law.

Dishonored

Refused; specifically, a payment that has been refused despite a holder presenting an instrument in a timely and proper manner.