Katty needs to purchase milk to make ice cream. The supplier charges a $60 fixed fee per order and $4.75 per kg. Her annual holding cost is 25%. She needs 1000 kgs of milk per day. Assume 52 weeks per year and 5 days per week. If Katty wants to minimize inventory holding and ordering costs, about how long is the milk kept in her store on average? Average Flow Time. PLEASE HAVE STEP BY STEP.
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Step 1: Calculate the annual demand for milk 1000 kgs/day x 5 days/week x 52 weeks/year = 260,000 kgs/year Show more…
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