=+17-25 KKK Effect of different order quantities on ordering costs and carrying costs, EOQ OBJECTIVE 2 Kanga Loo, a retailer of bed and bath linen, sells 234000 packages of Sir Walter designer sheets each year. Kanga Loo incurs an ordering cost of $96.43 per purchase order placed with Sir Walter Ltd and an annual carrying cost of $12.50 per package.

Lee Brundt, purchasing manager at Kanga Loo, seeks your help—she wants to understand how ordering and carrying costs vary with order quantity.

1 2

3 4

5 6

7 8

9 10 A B C D E F 1234 5 Annual demand (packages) 290 450 290 450 290 450 Cost per purchase order Carrying cost per package per year 14.00 14.00 14.00 14.00 14.00 Quantity (packages) per purchase order 900 1500 1900 2300 2700 Number of purchase orders per year Annual relevant ordering costs Annual relevant carrying costs Annual total relevant costs of ordering and carrying inventory Scenario

$

$87.00

$

$87.00

$

$87.00

$

$87.00

$

290 450 290 450

$87.00 Required 1 Complete the preceding table for Lee Brundt. What is the EOQ? Comment on your results.