Question

Inventory Control and Planning

McDuff Preserves expects to bottle and sell 1,800,000 32-oz jars of jam at a uniform rate throughout the year. The company orders its containers from Consolidated Bottle Company. The cost of ordering a shipment of bottles is $199, and the cost of storing each empty bottle for a year is $0.39. (Assume that each shipment of bottles is used up before the next shipment arrives.)

(a) How many orders should McDuff place per year if the ordering and storage costs are to be minimized? (Round your answer up to the nearest whole number.)

(b) Using the value from (a), how many bottles should be in each shipment if the ordering and storage costs are to be minimized? (Round your answer up to the nearest whole number.)

Answer 1