Question
Franklin Company purchases 4,500 units of Widgelets each year in lots of 500 units per order. cost of placing one order is $22, and the
Franklin Company purchases 4,500 units of Widgelets each year in lots of 500 units per order. cost of placing one order is $22, and the cost of carrying one unit of product in inventory for a year is $8.80.
Required:
1 What is the EOQ for Widgelets?
2 How many orders for Widgelets will Franklin place per year under the EOQ policy?
3 What is the total annual ordering cost of Widgelets under the EOQ policy?
4 What is the total annual carrying cost of Widgelets under the EOQ policy?
5 What is the total annual cost of Franklin's inventory policy for Widgelets under the EOQ policy?
Step by Step Solution
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There are 3 Steps involved in it
Step: 1
1 Economic Order Quantity EOQ Sqrt 2 x A x O C Where ...
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Financial and Managerial Accounting the basis for business decisions
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello
17th edition
007802577X, 978-0078025778
