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?

Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints
Section: Chapter Questions
Problem 2CE: Sterling Corporation has an EOQ of 5,000 units. The company uses an average of 500 units per day. An...
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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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