EOQ—Multiple-Choice:

a. The following information relates to the Henry Company

Assuming that the units will be required evenly throughout the year, what is the EOQ?

(1) 200. (2) 300. (3) 400. (4) 500.

b. Pierce Incorporated has to manufacture 30,000 blades for its electric lawn mowerdivision. The blades will be used evenly throughout the year. The setup cost every time a production run is made is $60, and the cost to carry a blade in inventory for the year is $.40. Pierce's objective is to produce the blades at the lowest cost possible. Assuming that each production run will be for the samenumber of blades, how many production runs should Pierce make?

(1) 12. (2) 10. (3) 8. (4) 4.

c. The Aron Company requires 40,000 units of product Q for the year. The units will be required evenly throughout the year. It costs $60 to place an order. It costs $120 to carry a unit in inventory for the year. What is the EOQ?

(1) 200. (2) 400. (3) 600. (4) 1,600.

Transcribed Image Text:

Units required per year 60,000 Cost of placing an order $400 Unit carrying cost per year $300