Ekor bakery sells doughnut. The annual demand is 10,000 per year. The ordering cost is $21, and holding cost is $3. If the demand exceeds the inventory, Ekor has two types of costs associated with the backorder. The lss of goodwill is $O.1 per unit short, and a "bookkeeping" cost of $0.3 per unit short per year.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Ekor bakery sells doughnut. The annual
demand is 10,000 per year. The ordering cost
is $21, and holding cost is $3. If the demand
exceeds the inventory, Ekor has two types of
costs associated with the backorder. The loss
of goodwill is $O.1 per unit short, and a
"bookkeeping" cost of $0.3 per unit short per
year.
Calculate: economic order quantity,
maximum acceptable inventory, cycle time,
and minimal total annual average cost.
Suppose the doughnuts are sold in
packages of 150 units each. How many
packages should sell? (Hint: Sensitivity of
EOQ).
Transcribed Image Text:Ekor bakery sells doughnut. The annual demand is 10,000 per year. The ordering cost is $21, and holding cost is $3. If the demand exceeds the inventory, Ekor has two types of costs associated with the backorder. The loss of goodwill is $O.1 per unit short, and a "bookkeeping" cost of $0.3 per unit short per year. Calculate: economic order quantity, maximum acceptable inventory, cycle time, and minimal total annual average cost. Suppose the doughnuts are sold in packages of 150 units each. How many packages should sell? (Hint: Sensitivity of EOQ).
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