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A building materials supplier obtains its bagged cement from a single  supplier. Demand is reasonably constant throughout the year, and last year the  company sold 2,000 tonnes of this product. It estimates the costs of placing an order  at around £25 each time an order is placed, and calculates that the annual cost of  holding inventory is 20 per cent of purchase cost. The company purchases the cement  at £60 per tonne. How much should the company order at a time?

A building materials supplier obtains its bagged cement from a single  supplier. Demand is reasonably constant throughout the year, and last year the  company sold 2,000 tonnes of this product. It estimates the costs of placing an order  at around £25 each time an order is placed, and calculates that the annual cost of  holding inventory is 20 per cent of purchase cost. The company purchases the cement  at £60 per tonne. How much should the company order at a time?

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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A building materials supplier obtains its bagged cement from a single 
supplier. Demand is reasonably constant throughout the year, and last year the 
company sold 2,000 tonnes of this product. It estimates the costs of placing an order 
at around £25 each time an order is placed, and calculates that the annual cost of 
holding inventory is 20 per cent of purchase cost. The company purchases the cement 
at £60 per tonne. How much should the company order at a time?

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