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a-h (Comprehens/ve EOQ calculations) Krutson Products inc, is involved in the production of airplane parts and has the following inventory, carrying, and siorage cosh: 1.
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(Comprehens/ve EOQ calculations) Krutson Products inc, is involved in the production of airplane parts and has the following inventory, carrying, and siorage cosh: 1. Orders must be placed in round lots of 100 units. 2. Annual unit usage is 250,000. (Assume a 50-woek year in yout calculations.) 3. The carrying cost is 15 percent of the purchase price. 4. The purchase price is $50 per unit. 5. The ordering cost is $500 per order. 6. The desired safety stock is 5,000 units, (This does not include delivery-time stock) 7. The delivery time is 4 week. Given the foregoing information: a. Determine the optimal EOQ level. b. How many orders will be placed annually? c. What is the inventory order point? (That is, at what level of inventory should a new order be placed? d. What is the average inventory level? a. What would happen to the EOQ if annual unit salos doubled (all other unit costs and safety stocks remaining constant)? What is the elasticily of EOO with respect to sales? (That is. What is the percentage change in EOQ divided by the percentage change in sales? f. If carrying conts double, What wil happen to the EOQ level? (Assume the criginal sales level of 250,000 units.) What is the elasticity of EOQ with respect to carrying costs? 9. If the ordering costs double, what with happen to the level of EOQ? (Again, assume original levels of sales and carrying costs) What is the elasticty of EOQ with respect to ordering costs? h. If the selling price doubles, what will happen to EOO? What is the elasticty of EOO with respect to seling price? a. What is the optimal economic order quantly (EOQ) level? (Note that ordors must be placed in round lots of 100 units) units (Round up to the noarest hundred) Step by Step Solution
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