The Small Company manufactures an assortment of menswear. The annual requirement is usually 35,000 units, and the
Question:
The Small Company manufactures an assortment of menswear. The annual requirement is usually 35,000 units, and the ordering cost is $8.33 per order. The average inventory is $10.50 per unit, and carrying costs are $4.66 per unit. This company never used the EOQ formula and is debating whether to use the graphic or tabular methods. In order to choose the proper method, they relied upon an analyst’s decisions. pg745 Required:
a Calculate the economic order quantity using the tabular method for order sizes of 50, 150, 250, 350, 450, 550, and 650.
Calculate the EOQ using the graphic method.
c Calculate the EOQ using the formula method.
d_ If you were the analyst, which method would you suggest the Small Company use?
Step by Step Answer:
Cost Accounting Concepts And Applications For Managerial Decision Making
ISBN: 9780070103108
2nd Edition
Authors: Ralph S. Polimeni, James A. Cashin, Frank J. Fabozzi, Arthur H. Adelberg