The Grey Sofa Company produces a specialty chairs, and has the following information available concerning its inventory items:Relevant ordering costs per purchase orderRelevant carrying costs per package per year:Required annual return on investmentRequired other costs per year$150.00425 units10%Annual demand is 10,000 chairs per year. The purchase price per unit is $16.O 1,000 unitsO 5,000 units$ 1.40What is the economic-order quantity? (HINT: Consider the annual opportunity cost per unit of $16 x 10% = $1.60)O 1,464 units

Economic order quantity determines the ideal order quantity that a company must place which ensures…

Answered: What is the economic-order quantity?…

What is the economic-order quantity? (HINT: Consider the annual opportunity cost per unit of $16 x 10% = $1.60) O 1,464 units 425 units O 1,000 units O 5,000 units

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The Grey Sofa Company produces a specialty chairs, and has the following information available concerning its inventory items:
Relevant ordering costs per purchase order
Relevant carrying costs per package per year:
Required annual return on investment
Required other costs per year
$150.00
425 units
10%
Annual demand is 10,000 chairs per year. The purchase price per unit is $16.
O 1,000 units
O 5,000 units
$ 1.40
What is the economic-order quantity? (HINT: Consider the annual opportunity cost per unit of $16 x 10% = $1.60)
O 1,464 units

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