The following information for the production of a machine component Z is provided. Amount (R) Annual requirement of component Z 50 000 Price per unit 0.12 Holding costs per unit per year 0.02 Ordering costs per order 6 Required: 4.1 Calculate EOQ for component Z 4.2 Calculate the total cost of holding and the total cost of ordering.
The following information for the production of a machine component Z is provided. Amount (R) Annual requirement of component Z 50 000 Price per unit 0.12 Holding costs per unit per year 0.02 Ordering costs per order 6 Required: 4.1 Calculate EOQ for component Z 4.2 Calculate the total cost of holding and the total cost of ordering.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The following information for the production of a machine component Z is provided.
Amount (R)
Annual requirement of component Z
50 000
Price per unit
0.12
Holding costs per unit per year
0.02
Ordering costs per order
Required:
4.1
Calculate EOQ for component Z
(7)
4.2
Calculate the total cost of holding and the total cost of ordering.
(8)
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