Spring Water

The demand for coconut water at SLC WalMart is 600 gallons per week. The setup cost for placing an order to replenish inventory is $25. Coconut water loses its freshness when stored, and SLC Walmart incurs an annual holding cost of $2.6/gallon. Assume that there are 52 weeks a year.
Determine SLC WalMart’s Economic Order Quantity in [gallons].

Question

Spring Water

The demand for coconut water at SLC WalMart is 600 gallons per week. The setup cost for placing an order to replenish inventory is $25. Coconut water loses its freshness when stored, and SLC Walmart incurs an annual holding cost of $2.6/gallon. Assume that there are 52 weeks a year.
Determine SLC WalMart’s Economic Order Quantity in [gallons].

BlackTom AI · Accepted Answer

The problem asks for the Economic Order Quantity (EOQ) for coconut water.
First, rest the given data: annual demand D, setup cost K, and annual holding cost per unit h. Here, weekly demand is 600 gallons, and there are 52 weeks in a year, so annual demand D = 600 × 52 = 31,200 gallons.
The setup cost for placing an order is K = $25, and the annual holding cost per gallon is h = $2.6.
The EOQ formula is EOQ = sqrt(2KD / h). This formula balances ordering costs with holding costs to minimize total costs.
Plug in the numbers: EOQ = sqrt(2 × 25 × 31,200 / 2.6).
Calculate the numerator: 2 × 25 × 31,200 = 50 × 31,200 = 1,560,000.
Divide by the holding cost: 1,560,000 / 2.6 = 600,000.
Take the square root: sqrt(600,000) ≈ 774.5967.
Therefore, the Economic Order Quantity is approximately 774.5967 gallons.
Note: The problem statement does not provide alternative answer choices to compare against, but the computed EOQ aligns with the standard EOQ formula and the given cost parameters.

OSC 3050-007 Fall 2025 Inventory Management: EOQ

View Explanation

Log in for full answers

Similar Questions

Question at position 22 Given the following information, what is the EOQ for this company: Average demand per week = 135 The ordering cost = $135 The inventory holding rate per year = 4% Unit cost = $50 Assume 50 weeks per year975 units955 units305 units191 units

Question at position 20 The annual demand of a certain item is 5,400 units and the computed EOQ is 900 units. What will be the time between orders in months?6 months 4 months3 months 2 months

EOQ should be used if you use a make-to-order strategy and the customer specifies that the entire order be delivered in one shipment.

Considering the EOQ model, larger lots are justified with higher holding costs.

An item experiences an annual demand of 3,600 units. It costs $10 to hold an item in inventory for one year and $20 to place an order. If the EOQ model is used, what is the time between orders? Assume that there are 52 business weeks in a year.

More Practical Tools for Students Powered by AI Study Helper

Homework AI Solver

Stylized AI Paper Writer

Plagiarism Checker Assistant

Citation AI Academic Writing Tool

In-Class Translation Assistant

AI Note Generator

AI Quiz Answers

Past Exam Questions from University Test Bank

Smart Practice Assistant

Adaptive Practice

Making Your Study Simpler