Crawford Steel Corp. buys inventory of 40,000 units annually. The purchase price per unit is $3.00 and delivery time takes 2 weeks after the order is placed. The ordering cost is $40 per order. The storing and insurance cost of the inventory per quarter is 20 percent of the purchase price. Based on the sales records, it normally maintains its safety stock of 4,500 units. Order should be placed in 100 units and 50 weeks is in a year. Calculate: the economic order quantity. the total cost of holding inventory. the inventory level should reorder be made. the number of orders that will be placed annually.
Crawford Steel Corp. buys inventory of 40,000 units annually. The purchase price per unit is $3.00 and delivery time takes 2 weeks after the order is placed. The ordering cost is $40 per order. The storing and insurance cost of the inventory per quarter is 20 percent of the purchase price. Based on the sales records, it normally maintains its safety stock of 4,500 units. Order should be placed in 100 units and 50 weeks is in a year. Calculate: the economic order quantity. the total cost of holding inventory. the inventory level should reorder be made. the number of orders that will be placed annually.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Crawford Steel Corp. buys inventory of 40,000 units annually. The purchase price per unit is $3.00 and delivery time takes 2 weeks after the order is placed. The ordering cost is $40 per order. The storing and insurance cost of the inventory per quarter is 20 percent of the purchase price. Based on the sales records, it normally maintains its safety stock of 4,500 units. Order should be placed in 100 units and 50 weeks is in a year. Calculate:
- the economic order quantity.
- the total cost of holding inventory.
- the inventory level should reorder be made.
- the number of orders that will be placed annually.
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