Octopus Company provides you with the following information regarding its inventory: Maximum lead time 5 weeks Minimum lead time 2 weeks Normal lead time 3 weeks Normal weekly usage 4 000 units Interest rate 5% Cost price per unit R20 per unit Inventory carrying cost R7 per unit Ordering cost R30 per order Maximum weekly usage 4 000 units Minimum weekly usage 3 000 units Required: a).Calculate EOQ b). safety stock c). total ordering cost

Octopus Company provides you with the following information regarding its inventory: Maximum lead time 5 weeks Minimum lead time 2 weeks Normal lead time 3 weeks Normal weekly usage 4 000 units Interest rate 5% Cost price per unit R20 per unit Inventory carrying cost R7 per unit Ordering cost R30 per order Maximum weekly usage 4 000 units Minimum weekly usage 3 000 units Required: a).Calculate EOQ b). safety stock c). total ordering cost

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter10: Inventory

Section: Chapter Questions

Problem 6EA: Akira Company had the following transactions for the month. Calculate the gross margin for the...

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Question

Octopus Company provides you with the following information regarding its inventory:

Maximum lead time 5 weeks

Minimum lead time 2 weeks

Normal lead time 3 weeks

Normal weekly usage 4 000 units

Interest rate 5%

Cost price per unit R20 per unit

Inventory carrying cost R7 per unit

Ordering cost R30 per order

Maximum weekly usage 4 000 units

Minimum weekly usage 3 000 units

Required:

a).Calculate EOQ

b). safety stock

c). total ordering cost

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