Concept explainers
The Food Place Supermarket stocks Munehkin Cookies. Demand for Munchkins is 5000 boxes per year (365 days). It costs the store $80 per order of Munchkins, and it costs $0.50 per box per year to keep the cookies in stock. Once an order for Munchkins is placed, it takes four days to receive the order from a food distributor. Determine the following:
- a. Optimal order size
- b. Minimum total annual inventory cost
- c. Reorder point
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