The ABC co.is planning to stock new product. The ABC co.has developed the following information: Annual usage = 5400 units Cost of the product = 365 MU/unit Ordering cost = 55 MU/order Carrying cost = 28%/year of inventory value held a) Determine the optimal number of units per order? b) Find the optimal number of orders/year? c) Find the annual total inventory cost?
The ABC co.is planning to stock new product. The ABC co.has developed the following information: Annual usage = 5400 units Cost of the product = 365 MU/unit Ordering cost = 55 MU/order Carrying cost = 28%/year of inventory value held a) Determine the optimal number of units per order? b) Find the optimal number of orders/year? c) Find the annual total inventory cost?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The ABC co.is planning to stock new product. The ABC co.has developed the
following information:
Annual usage = 5400 units
Cost of the product = 365 MU/unit
Ordering cost = 55 MU/order
Carrying cost = 28%/year of inventory value held
a) Determine the optimal number of units per order?
b) Find the optimal number of orders/year?
c) Find the annual total inventory cost?
Please mention formulas and do it in detail so I can understand.
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