Identify the appropriate inventory model to obtain the optimal lot size for the given problem description: A small grocery store sells fresh produce, which it obtains from a local farmer. During the strawberry season, demand for fresh strawberries can be reasonably approximated using a normal distribution with a mean of 40 quarts per day and a standard deviation of 6 quarts per day. The grocer purchases fresh strawberries daily from the local farmer for $1.5 per quart and sells them for $3.20 per quart. At the end of each business day, any remaining strawberries are sold to a producer of fresh juice for 50 cents. a. Single Period b. Fixed Order Interval c. EOQ d. ROP e. None of the above

d. ROP

Explanation

The economic order quantity is the minimum amount of inventory that a seller must keep to demand and lower the holding cost. The reorder point is the inventory management system in which a certain level of inventory is set as a trigger for reordering the stock. The cost of excess stock for the grocery store is $1 ($1.50 - $0.50). The cost of under cutting the inventory is $1.70 ($3.20 - $1.50). The cost of under stocking is more than cost of excess inventory. The best model which will suit the grocery store is ROP.

there was no passage listed but using the process of elimination i'd say it was d. the high economy would do the opposite. i don't see how low prices would affect it. high unemployment is possible but i feel d is the better answer.

i would prefer to go with the news article for nate, its recent and updated and stores a lot of information