Problem
Island Dairies are the main manufacturers of the famous Tastee Cheese products. The dairy manufacturer sells 15000 tins of cheese per month each tin of cheese costs $560, while the estimated annual demand for the cheese is 180,000 tins. The annual carrying cost of each tin of cheese is 30% of the cost for each tin of cheese.
However, each order of liquefied milk preservatives (gallons) the company makes costs $465; which includes documentation and delivery expenses. The order lead time 12 is days and the company operates 365 days for a year. The company's milk preservatives are produced by Barco Chemicals.
Task:
• Calculate the Economic Order Quantity of milk preservatives needed per month?
• Calculate the Re-Order point?