Fiber Technology, Inc., manufactures glass fibers used in the communications industry. The company's materials and parts manager is currently revising the inventory policy for XL-20, one of the chemicals used in the production process. The chemical is purchased in 10-pound canisters for $107 each. The firm uses 6,000 canisters per year. The controller estimates that it costs $162 to place and receive a typical order of XL-20. The annual cost of storing XL-20 is $5.20 per canister.

Required:

2. Use the EOQ formula to determine the optimal order quantity.

3. What is the total annual cost of ordering and storing XL-20 at the economic order quantity?

4. How many orders will be placed per year?

5. Fiber Technologys controller, Jay Turnbull, recently attended a seminar on JIT purchasing. Afterward he analyzed the cost of storing XL-20, including the costs of wasted space and inefficiency. He was shocked when he concluded that the real annual holding cost was $31.20 per canister. Turnbull then met with Doug Kaplan, Fiber Technologys purchasing manager. Together they contacted Reno Industries, the supplier of XL-20, about a JIT purchasing arrangement. After some discussion and negotiation, Kaplan concluded that the cost of placing an order for XL-20 could be reduced to just $32. Using these new cost estimates, Turnbull computed the new EOQ for XL-20 a. Use the equation approach to compute the new EOQ.b. How many orders will be placed per year?

1.Use the EOQ formula to determine the optimal order quantity. (Round your answer to nearest whole number.)

2.What is the total annual cost of ordering and storing XL-20 at the economic order quantity? (Round intermediate calculations and final answer to nearest whole number.)

3.How many orders will be placed per year? (Round intermediate calculations and final answer to nearest whole number.)

4. Fiber Technologys controller, Jay Turnbull, recently attended a seminar on JIT purchasing. Afterward he analyzed the cost of storing XL-20, including the costs of wasted space and inefficiency. He was shocked when he concluded that the real annual holding cost was $31.20 per canister. Turnbull then met with Doug Kaplan, Fiber Technologys purchasing manager. Together they contacted Reno Industries, the supplier of XL-20, about a JIT purchasing arrangement. After some discussion and negotiation, Kaplan concluded that the cost of placing an order for XL-20 could be reduced to just $32.00. Using these new cost estimates, Turnbull computed the new EOQ for XL-20. a. Use the equation approach to compute the new EOQ. (Round your answer to nearest whole number.) b. How many orders will be placed per year? (Round your answer to nearest whole number.)