Foods Galore is a major distributor to restaurants and other institutional food users. Foods Galore buys cereal from a manufacturer for $28 per case. Annual demand for cereal is 242,500 cases, and the company believes that the demand is constant at 970 cases per day for each of the 250 days per year that it is open for business. Average lead time from the supplier for replenishment orders is seven days, and the company believes that it is also constant. The purchasing agent at Foods Galore believes that annual inventory carrying cost is 25 percent and that it costs $52 to prepare, send, and receive an order. Standard Deviations and Probabilities Z= Number of Deviations Required Probability of Being in Stock Probability of Stockout 84.13% 15.77% 1.04 85 1.28 90 10 1.65 95 1.96 97.5 2.5 2.0 9772 2.28 2.33 99 3.0 99.86 0.14
a. How many cases of cereal should Foods Galore order each time it places an order? (Round your answer to the nearest whole number.)
Economic Order Quantity: ? cases
b. What will be the average inventory? (Round your answer to 1 decimal place.)
? cases
c. What will be the inventory turnover rate? (Round your answer to 1 decimal place.)
Inventory Turnover: ? times per year
d. Calculate the total annual cost based on a product cost of $28/unit. (Include the product cost in your total. Do not round intermediate calculations. Round your answer to 2 decimal places.)
Total annual cost?