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The Always Fresh Grocery Store carries a particular brand of tea that has the following...

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Finance

The Always Fresh Grocery Store carries a particular brand of tea that has the following characteristics:

  • Sales = 8 cases per week
  • Ordering cost = $10 per order
  • Carrying charge = 20 percent per year
  • Item cost = $80 per case

Given the above information, the EOQ and total cost are:

What is the effect on EOQ and total cost of the following types of changes? (Round EOQs up to the nearest integer and total cost up to the next dollar.)

(Note: answer each part independently.)

Click here for the Excel Worksheet File

Use this file to solve problems

a. A 40 percent increase in demand.

b. A 20 percent increase in carrying charge.

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