Consider the following companies:
A local doughnut shop with 2 employees
Which of those companies is most likely to use the EOQ model for ordering inventor? And which is the least likely? Support your answer fully!
Aqua Pure purchases 50,000 gallons of distilled water each year. Ordering costs are $100 per order, and the carrying cost, as a percentage of inventory value, is 80 percent. The purchase price to CCC is $0.50 per gallon. Management currently orders the EOQ each time an order is placed. No safety stock is carried. The supplier is now offering a quantity discount of $0.03 per gallon if CCC orders 10,000 gallons at a time. Should CCC take the discount? WHY?
Show your work for full credit!