Question:
A food processor uses approximately 27,000 glass jars a month for its fruit juice product. Because of storage limitations, a lot size of 4,000 jars has been used. Monthly holding cost is 18 cents per jar, and reordering cost is $ 60 per order.
The company operates an average of 20 days a month.
a) What penalty is the company incurring by its present order size?