a company sells 600 bottles of a dietary supplement per week at$ 100 per bottle. The supplement is ordered from a supplier who charges fixed cost of $30 per order, and $ 50 per bottle. The annual inventory holding cost is 40%. Assume the company operates 50 weeks in a year. What is the optimal number of bottles company should order?
the economic order quantity or optimal quantity = 300 bottles per order
economic order quantity (EOQ) = √[(2SD) / H]S = cost per order = $30D = annual demand = 600 x 50 weeks = 30,000H = holding costs = $50 x 40% = $20
EOQ = √[(2 x $30 x 30,000) / $20] = √($1,800,000 / $20) = √90,000 = 300
This means that the company must make 2 orders per week and 100 orders per year. This happens because the holding costs per unit are too high, therefore, in order to reduce costs you must have a small inventory.
what are the sentences? so we can answer the question.
if you use only 25 for your entertainment and only 200 for the groceries that you really need and take out the 50 per month for the computer then that should be enough