Short Grass Incorporated is a distributor of golf balls.Martin's Golf Supplies is a local retail outlet which sells golf balls.Martin's purchases the golf balls from Short Grass Incorporated at $1.15 per ball;the golf balls are shipped in cartons of 72.Short Grass Incorporated pays all incoming freight,and Martin's Golf Supplies does not inspect the balls due to Short Grass' reputation for high quality.Annual demand is 158,520 golf balls at a rate of 3891 balls per week.Martin's Golf Supplies earns 8% on its cash investments.The purchase-order lead time is one week.The following cost data are available:

What is the economic order quantity? (Round costs to the nearest cent and quantities to the nearest whole number. )

Question

Short Grass Incorporated is a distributor of golf balls.Martin's Golf Supplies is a local retail outlet which sells golf balls.Martin's purchases the golf balls from Short Grass Incorporated at $1.15 per ball;the golf balls are shipped in cartons of 72.Short Grass Incorporated pays all incoming freight,and Martin's Golf Supplies does not inspect the balls due to Short Grass' reputation for high quality.Annual demand is 158,520 golf balls at a rate of 3891 balls per week.Martin's Golf Supplies earns 8% on its cash investments.The purchase-order lead time is one week.The following cost data are available:

What is the economic order quantity? (Round costs to the nearest cent and quantities to the nearest whole number. )

Quizplus · Accepted Answer

Annual Demand / 158,520 / 72 = 2202 cartons
Carrying Cost per carton = ($1.15 × 72 × 8%)+ $0.87 = $7.49
EOQ =
 11ea8a5a_a00f_c8b1_a19c_8ba947b38ce6_TB5540_00_TB5540_00_TB5540_00 EOQ = $274.3 cartons - round to $274

Short Grass Incorporated Is a Distributor of Golf Balls