DRP Dairy produces cheese, yoghurt and ice cream. They use milk from Raymond?sfarm and Raymond has 300 milk cows and 500 meat cows. He receives 600 litres ofmilk from 10 cows a day and all the milk cows have to be milked every day. DRPDairy only needs 14 000 litres per day. Raymond sells the milk at R1.50 per litre. Itcosts DRP Dairy R0.80 to store one litre of milk and R0.20 to place an order for 2litres. The applicable interest rate is 18% p.a.
Economic Order Quantity
Number of orders per year
Ordering cost per year
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