Phyllis Limited produces a product called SOMUAH. The manufacture of this product requires raw materials per month of 1,000kg and this is even throughout the year. The ordering cost per order is GH₵ 250 and each kilogram costs GH₵ 25.00. Annual holding cost is estimated at 20% of the cost of a kilogram of material. Required: Calculate the following: a) The Economic Order Quantity (EOQ) b) Annual Inventory Cost
Phyllis Limited produces a product called SOMUAH. The manufacture of this product requires raw materials per month of 1,000kg and this is even throughout the year. The ordering cost per order is GH₵ 250 and each kilogram costs GH₵ 25.00. Annual holding cost is estimated at 20% of the cost of a kilogram of material. Required: Calculate the following: a) The Economic Order Quantity (EOQ) b) Annual Inventory Cost
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Phyllis Limited produces a product called SOMUAH. The manufacture of this product requires raw materials per month of 1,000kg and this is even throughout the year. The ordering cost per order is GH₵ 250 and each kilogram costs GH₵ 25.00. Annual holding cost is estimated at 20% of the cost of a kilogram of material.
Required: Calculate the following:
a) The Economic Order Quantity (EOQ)
b) Annual Inventory Cost
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