Should the inventory manager simply double the EOQ order quantity? (Select the best response.) O A. Yes B. No What is the new EOQ? ] zen-zens (Round to the nearest whole unit.) What is the new annual carrying cost for the zen-zens? $I (Round to the nearest dollar.) What is the new annual ordering cost for the zen-zens? (Round to the nearest dollar.)
Should the inventory manager simply double the EOQ order quantity? (Select the best response.) O A. Yes B. No What is the new EOQ? ] zen-zens (Round to the nearest whole unit.) What is the new annual carrying cost for the zen-zens? $I (Round to the nearest dollar.) What is the new annual ordering cost for the zen-zens? (Round to the nearest dollar.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:**Economic Order Quantity (EOQ)**
Tinnendo, Inc. believes it will sell 4 million zen-zens, an electronic game, this coming year. Note that this figure is for annual sales. The inventory manager plans to order zen-zens 38 times over the next year. The carrying cost is $0.03 per zen-zen per year. The order cost is $661 per order. It turns out that the marketing manager has underestimated the zen-zen market. The zen-zens are a smash, and current estimates are that the company will sell 8 million of them per year. Should the inventory manager simply double the EOQ order quantity? Find the new EOQ, and verify that it is the correct order quantity by finding the new carrying cost and new ordering cost.
**Should the inventory manager simply double the EOQ order quantity? (Select the best response.)**
- A. Yes
- B. No
**What is the new EOQ?**
- ____ zen-zens (Round to the nearest whole unit.)
**What is the new annual carrying cost for the zen-zens?**
- $____ (Round to the nearest dollar.)
**What is the new annual ordering cost for the zen-zens?**
- $____ (Round to the nearest dollar.)
This text introduces the concept of Economic Order Quantity (EOQ) within the context of a company that sells electronic games. The text presents a scenario where the market demand for the games has increased, and the company needs to reassess its EOQ to optimize costs. The goal is to calculate the new EOQ and verify it by computing the corresponding carrying and ordering costs.
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