A company stocks an item that is consumed at the rate of 30 units each day. Every time an order is placed for new supply, $ 120 must be paid. A unit inventory held in stock for one week will cost $ 0.14. What is the economic order quantity (EOQ)? What is the cycle time for the EOQ? What is the total annual cost for the EOQ?
A company stocks an item that is consumed at the rate of 30 units each day. Every time an order is placed for new supply, $ 120 must be paid. A unit inventory held in stock for one week will cost $ 0.14. What is the economic order quantity (EOQ)? What is the cycle time for the EOQ? What is the total annual cost for the EOQ?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A company stocks an item that is consumed at the rate of 30 units each day. Every time an order is placed for new supply, $ 120 must be paid. A unit inventory held in stock for one week will cost $ 0.14.
- What is the economic order quantity (EOQ)?
- What is the cycle time for the EOQ?
- What is the total annual cost for the EOQ?
- What is the total annual cost if the order quantity is 200 more than EOQ?
- What is the optimum number of orders (rounded to the closest integer) that the company has to place each year? Assume that the company has a standing policy of not allowing shortages in demand.
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