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1. Each year, Y Company purchases 20,000 units of an item that costs P 640 per unit. The cost of placing an order is 480, and the cost to hold the item in inventory for one year is P150. b. What is the average inventory level, assuming that the minimum inventory level is zero? c. Determine the total annual ordering cost and the total annual holding cost for the item if the EOQ is used.

1. Each year, Y Company purchases 20,000 units of an item that costs P 640 per unit. The cost of placing an order is 480, and the cost to hold the item in inventory for one year is P150. b. What is the average inventory level, assuming that the minimum inventory level is zero? c. Determine the total annual ordering cost and the total annual holding cost for the item if the EOQ is used.

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Please answer what is asked in letter B and C. Thank you!

1. Each year, Y Company purchases 20,000 units of an item that costs P 640 per unit. The cost of placing an order is P480, and the cost to hold the item in inventory for one year is P150. b. What is the average inventory level, assuming that the minimum inventory level is zero? c. Determine the total annual ordering cost and the total annual holding cost for the item if the EOQ is used.
Transcribed Image Text:1. Each year, Y Company purchases 20,000 units of an item that costs P 640 per unit. The cost of placing an order is P480, and the cost to hold the item in inventory for one year is P150. b. What is the average inventory level, assuming that the minimum inventory level is zero? c. Determine the total annual ordering cost and the total annual holding cost for the item if the EOQ is used.
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