Ahmad Enterprise requires 40,000 gallons of material annually, the cost of placing an order is RM40; the annual carrying cost per gallon is RM3. Required: (a) Determine the EOQ from potential order size of 300, 400, 500, 600, 700 and 800 gallons by constructing a table. (Refer to the sample given) Order size Number of orders Total order costs (RM) 2 Average Inventory (b) Use the EOQ formula to verify your answer to part (a) Total carrying cost ($) Total order & carrying cost (RM) 2/5
Ahmad Enterprise requires 40,000 gallons of material annually, the cost of placing an order is RM40; the annual carrying cost per gallon is RM3. Required: (a) Determine the EOQ from potential order size of 300, 400, 500, 600, 700 and 800 gallons by constructing a table. (Refer to the sample given) Order size Number of orders Total order costs (RM) 2 Average Inventory (b) Use the EOQ formula to verify your answer to part (a) Total carrying cost ($) Total order & carrying cost (RM) 2/5
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Ahmad Enterprise requires 40,000 gallons of material annually, the cost of placing an order is RM40;
the annual carrying cost per gallon is RM3.
Required:
(a) Determine the EOQ from potential order size of 300, 400, 500, 600, 700 and 800 gallons by
constructing a table. (Refer to the sample given)
Order
size
Number of
orders
Total order
costs (RM)
2
Average
Inventory
(b) Use the EOQ formula to verify your answer to part (a)
Total carrying
cost ($)
Total order &
carrying cost
(RM)
2/5
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