Statistics Solutions

[All Steps] A produce distributor uses 9600 packing crates per year, which it purchases at a cost of $10 each. Management has assigned the annual holding

Question: A produce distributor uses 9600 packing crates per year, which it purchases at a cost of $10 each. Management has assigned the annual holding cost at 35 percent of the purchase price per crate. Order placement cost is $28.

  1. If management orders once per month, what is the current total ( ordering + holding + purchase ) cost per year?
  2. Determine EOQ for this problem.
  3. How much would the firm save annually if the EOQ were used?

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