EOQ and changing demand Pocks Company uses 6,750 gallons of epoxy resin each year for the manufacture
Question:
EOQ and changing demand Pocks Company uses 6,750 gallons of epoxy resin each year for the manufacture of impregnated memory boards. The cost of the resin is $15 per gallon, and carrying cost is 18 percent of product cost. The cost of placing orders is $50.
The company has always ordered the economic order quantity of epoxy, placing 14 orders per year. Management now expects demand for the memory boards to increase 50 percent next year.
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REQUIRED a. Compute the EOQ for the current year. b. Compute the total cost of inventory at this year's EOQ. c. Compute the EOQ for next year and determine the effect of the change in demand on the EOQ. d. Compute the total cost of inventory at next year's EOQ. e. What would be the total inventory cost if the company continued to place orders at the old EOQ next year?
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