Lakeshore Manufacturing sells 4,200 units of a specialized component annually. The carrying cost per unit is $3.15, and the fixed ordering cost is $85 per order. What is the economic order quantity? a. 451 units b. 476 units c. 502 units d. 488 units e. 495 units

Lakeshore Manufacturing sells 4,200 units of a specialized component annually. The carrying cost per unit is $3.15, and the fixed ordering cost is $85 per order. What is the economic order quantity? a. 451 units b. 476 units c. 502 units d. 488 units e. 495 units

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 8E: Melchar Company uses 78,125 pounds of oats each year. The cost of placing an order is 18, and the...

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Lakeshore Manufacturing sells 4,200 units of a
specialized component annually.
The carrying cost per unit is $3.15, and the fixed ordering
cost is $85 per order.
What is the economic order quantity?
a. 451 units
b. 476 units
c. 502 units
d. 488 units
e. 495 units

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Melchar Company uses 78,125 pounds of oats each year. The cost of placing an order is 18, and the carrying cost for one pound of oats is 0.45. Required: 1. Compute the economic order quantity for oats. 2. Compute the carrying and ordering costs for the EOQ.
Sterling Corporation has an EOQ of 5,000 units. The company uses an average of 500 units per day. An order to replenish the part requires a lead time of five days. Required: 1. Calculate the reorder point, using Equation 20.3. 2. Graphically display the reorder point, where the vertical axis is inventory (units) and the horizontal axis is time (days). Show two replenishments, beginning at time zero with the economic order quantity in inventory. 3. What if the average usage per day of the part is 500 units but a daily maximum usage of 575 units is possible? What is the reorder point when this demand uncertainty exists?
What is the economic order quantity?
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