Sims Hardware sells wood pellets used in heating stoves and slow-cook grills.
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EOQ FOR A RETAIL COMPANY: SIMS HARDWARE
Sims Hardware sells wood pellets used in heating stoves and slow-cook grills. The supplier for the pellets pays all incoming freight. Following is detailed data collected regarding pellet inventory needs:
Annual demand for wood pellets
65,000 lbs.
Ordering cost per purchase order
$120
Carrying cost per year
15% of purchase costs
Safety-stock requirements
none
Cost of wood pellets
$4 per 40 lb bag
The purchasing lead time is three weeks. Sims Hardware is open 240 days a year (48 weeks for 5 days a week).
Required:
Calculate the EOQ for wood pellets.
Calculate the number of orders that will be placed each year.
Calculate the reorder point for wood pellets.
Follow the instructions you see on the Data tab of the worksheet. Show all calculations within the cells of the Excel spreadsheet (found in Module 6 or by clicking “Next” at the bottom of this page). This means that you must use formulas and links so that your thought process can be examined.
Review the grading rubric to understand how you will be graded on this assignment. Reach out to your instructor if you have questions about the assignment.
Submit your downloaded and completed Excel file with your name added to the file name for grading by your instructor to
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