The Milling Corp A) What Is the Economic Order Quantity?
B) What Is

question 104

Essay

The Milling Corp. has developed a new type of widget. The local distributor expects to increase his sales by 25% over the past year due to this new development. Last year's sales were $150,000 at a selling price of $100 per unit. A safety stock of 35 units has eliminated stockouts. The manager would like to cut costs as much as possible, so he has come to you for advice. $\begin{array} { l l } \text { Warehouse space } & \$ 2.50 / \text { unit } \\\text { Material Handling Expense } & \$ 1.50 / \text { unit } \\\text { Insurance Premium } & \$ 1.00 / \text { unit } \\\text { Total ordering cost } & \$ 100.00 / \text { per order }\end{array}$ a) What is the economic order quantity?
b) What is the amount of average inventory?
c) How many orders will be made per year?
d) What is the total cost of this inventory decision?

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Definitions:

Prefrontal Cortex

A part of the brain located at the front of the frontal lobes, critical for decision making, social behavior, and moderating complex cognitive behavior.

Hull-Spence Model

The Hull-Spence Model is a theory of learning that combines Hull's drive reduction theory with Spence's focus on the role of incentive and reinforcement in the learning process.

Generalization Task

A task designed to assess the extent to which learned behavior is displayed in response to stimuli that are similar, but not identical, to the stimulus present during training.