Suppose a company has 1,000 units of a raw material part on hand. If 750 of these units are routed into production, should the company place an order to stock up on more of these parts? (Show calculations). Determine the economic order quantity (EOQ) for this part, assuming the following: The company plans to use 10,000 units during the coming year. The company orders this part in lots of 1,000 units, and each order placed carries a processing cost of $2.50. Each unit of inventory carries an annual holding cost of $6.40.
Suppose a company has 1,000 units of a raw material part on hand. If 750 of these units are routed into production, should the company place an order to stock up on more of these parts? (Show calculations). Determine the economic order quantity (EOQ) for this part, assuming the following: The company plans to use 10,000 units during the coming year. The company orders this part in lots of 1,000 units, and each order placed carries a processing cost of $2.50. Each unit of inventory carries an annual holding cost of $6.40.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Suppose a company has 1,000 units of a raw material part on hand. If 750 of these units are routed into production, should the company place an order to stock up on more of these parts? (Show calculations).
Determine the economic order quantity (EOQ) for this part, assuming the following:
The company plans to use 10,000 units during the coming year.
The company orders this part in lots of 1,000 units, and each order placed carries a
Each unit of inventory carries an annual holding cost of $6.40.
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