Bill Maze, recently hired by Custom Computers, Inc., has suggested using the economic order quantity for the

Question:

Bill Maze, recently hired by Custom Computers, Inc., has suggested using the economic order quantity for the heat sinks. Using the information in Problem 9, calculate the following:

(a) Economic order quantity

(b) Average inventory level

(d) The total annual ordering cost

(e) The total annual holding cost

(f) The total annual cost

Compare these results with the costs calculated in Problems 9 and 10.

Economic Order Quantity
Economic order quantity (EOQ) is the ideal order quantity a company should purchase to minimize inventory costs such as holding costs, shortage costs, and order costs. This production-scheduling model was developed in 1913 by Ford W. Harris and has...