A company produces motor bikes. It needs 5400 tires every year. It buys tires from a supplier for OMR 20 per tire. The company’s inventory carrying cost is estimated to be 20% of purchase cost and the ordering cost is OMR 50 per order. Calculate: (A) Economic Ordering Quantity. (B) Minimum total inventory cost per year. (C) Ordering quantity for each month (D) Average inventory at any time (E) Optimum order interval (F) Write complete conclusion Example 2:A company produces motor bikes. It needs 5400 tires every year. It buys tires froma supplier for OMR 20 per tire. The company's inventory carrying cost is estimatedto be 20% of purchase cost and the ordering cost is OMR 50 per order. Calculate:(A) Economic Ordering Quantity.(B) Minimum total inventory cost per year.(C) Ordering quantity for each month(D) Average inventory at any time(E) Optimum order intervalCSwae cooplete looncusiocanner

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Answered: Example 2: A company produces motor…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A company produces motor bikes. It needs 5400 tires every year. It buys tires from a supplier for OMR 20 per tire. The company’s inventory carrying cost is estimated to be 20% of purchase cost and the ordering cost is OMR 50 per order. Calculate: (A) Economic Ordering Quantity. (B) Minimum total inventory cost per year. (C) Ordering quantity for each month (D) Average inventory at any time (E) Optimum order interval (F) Write complete conclusion

Example 2:
A company produces motor bikes. It needs 5400 tires every year. It buys tires from
a supplier for OMR 20 per tire. The company's inventory carrying cost is estimated
to be 20% of purchase cost and the ordering cost is OMR 50 per order. Calculate:
(A) Economic Ordering Quantity.
(B) Minimum total inventory cost per year.
(C) Ordering quantity for each month
(D) Average inventory at any time
(E) Optimum order interval
CSwae cooplete looncusiocanner

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