A Company estimates that its carrying cost is 20% of the purchase price and its ordering cost at $220per order. The estimated annual requirement is 1900units at a price of $200 per unit. How many times per year does the store reorder? Round the answer to a whole number with no decimal. Answer:

A Company estimates that its carrying cost is 20% of the purchase price and its ordering cost at $220per order. The estimated annual requirement is 1900units at a price of $200 per unit. How many times per year does the store reorder? Round the answer to a whole number with no decimal. Answer:

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints

Section: Chapter Questions

Problem 6E: Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The...

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A Company estimates that its carrying cost is 20% of the purchase price and its ordering cost at $220per order. The estimated
annual requirement is 1900units at a price of $200 per unit. How many times per year does the store reorder? Round the
answer to a whole number with no decimal.
Answer:
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Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The cost of placing an order is 30. The cost of holding one unit of inventory for one year is 15.00. Currently, Ottis places 160 orders of 4,000 plastic housing units per year. Required: 1. Compute the annual ordering cost. 2. Compute the annual carrying cost. 3. Compute the cost of Ottiss current inventory policy. Is this the minimum cost? Why or why not?