Kingston Distributors Inc. has Total sales of 80,000 units and an economic ordering quantity (EOQ) of...
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Kingston Distributors Inc. has Total sales of 80,000 units and an economic ordering quantity (EOQ) of 4,000 units. The firm's ordering cost is $400 per order. Other costs associated with inventory are as follows: Storage Handling Insurance $0.50 per unit 1.60 per unit 1.90 per unit Required: a) If Kingston Distributors increases their annual sales to 100,000 units, what will its new Economic Ordering Quantity be? (3 marks) b) How much is the firm's total inventory cost increase when its EOQ changes? (6 marks) c) By how much would the firm's total inventory cost increase if they have safety stock of 6,000 units (1 marks) Kingston Distributors Inc. has Total sales of 80,000 units and an economic ordering quantity (EOQ) of 4,000 units. The firm's ordering cost is $400 per order. Other costs associated with inventory are as follows: Storage Handling Insurance $0.50 per unit 1.60 per unit 1.90 per unit Required: a) If Kingston Distributors increases their annual sales to 100,000 units, what will its new Economic Ordering Quantity be? (3 marks) b) How much is the firm's total inventory cost increase when its EOQ changes? (6 marks) c) By how much would the firm's total inventory cost increase if they have safety stock of 6,000 units (1 marks)
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a After expanding their annual sales to 100000 units Kingston distributors Inc can utilize the EOQ calculation to determine their new Economic Orderin... View the full answer
Related Book For
Management Accounting
ISBN: 9781760421144
7th Edition
Authors: Kim Langfield Smith, Helen Thorne, David Alan Smith, Ronald W. Hilton
Posted Date:
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