Redfern Butchery Orders Most of Its Items in Lot Sizes

question 100

Essay

Redfern Butchery orders most of its items in lot sizes of 10 units.Average annual demand per side of venison is 720 units per year.Ordering costs are $32.50 per order with an average purchasing price of $130.Annual inventory carrying costs are estimated to be 40% of the unit cost.
Required:
a.Determine the economic order quantity (EOQ).
b.Determine the annual cost savings if the shop changes from an order size of 10 units to the economic order quantity (EOQ).
c.Since the shelf life is limited,the Redfern Butchery must keep the inventory moving.Assuming a 360-day year,determine the optimal lot size under each of the following: (1)a 20-day shelf life and (2)a 10-day shelf life.
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Definitions:

Humanistic Therapy

A therapeutic approach focusing on an individual's potential and stresses the importance of growth and self-actualization.

Classical Conditioning

A learning process that occurs through associations between an environmental stimulus and a naturally occurring stimulus, famously demonstrated by Ivan Pavlov.

Cognitive Therapy

A form of psychotherapy that emphasizes the importance of thought patterns in how we feel and what we do.

Psychodynamic

A psychological theory or approach that emphasizes the systematic study of the psychological forces that underlie human behavior, feelings, and emotions and how they might relate to early experience.