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Unfortunately the supplier of inventory has a minimum order quantity of 2,000 units. How much more will it cost your company each year in total because of this supplier requirement? Show your workings.

Unfortunately the supplier of inventory has a minimum order quantity of 2,000 units. How much more will it cost your company each year in total because of this supplier requirement? Show your workings.

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Your company is streamlining its inventory management systems and has evaluated its inventory purchasing using the Economic Order Quantity (EOQ) model. 75,000 units are used annually. Each unit costs $50. The order cost (per order) is $180 and the carrying cost per item per year is $40. On the basis of this information it is recommended that the EOQ is 822 units per order. Unfortunately the supplier of inventory has a minimum order quantity of 2,000 units. How much more will it cost your company each year in total because of this supplier requirement? Show your workings.
Transcribed Image Text:Your company is streamlining its inventory management systems and has evaluated its inventory purchasing using the Economic Order Quantity (EOQ) model. 75,000 units are used annually. Each unit costs $50. The order cost (per order) is $180 and the carrying cost per item per year is $40. On the basis of this information it is recommended that the EOQ is 822 units per order. Unfortunately the supplier of inventory has a minimum order quantity of 2,000 units. How much more will it cost your company each year in total because of this supplier requirement? Show your workings.
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