Company XYZ maintains item Y in inventory. They use approximately 1,200 units annually, with each unit costing $20. The supplier has a consistent lead time of six days. Holding costs are $5 per unit of average inventory, and the ordering cost is $2.50 per order. Assume 365 days in a year. What is the economic order quantity? A. 25 B. 35 C. 49 D. 55

Company XYZ maintains item Y in inventory. They use approximately 1,200 units annually, with each unit costing $20. The supplier has a consistent lead time of six days. Holding costs are $5 per unit of average inventory, and the ordering cost is $2.50 per order. Assume 365 days in a year. What is the economic order quantity? A. 25 B. 35 C. 49 D. 55

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 2CE: Sterling Corporation has an EOQ of 5,000 units. The company uses an average of 500 units per day. An...

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