Question
Inventory costs can be categorized as the costs associated with holding the inventory, ordering and receiving the inventory, or running out of the inventory. For
Inventory costs can be categorized as the costs associated with holding the inventory, ordering and receiving the inventory, or running out of the inventory. For example, costs are minimized by holding higher inventory levels.
The number of units in the optimal size order is called the economic ordering quantity (EOQ). Johnson Company purchases custom-made durable packing boxes to ship its equipment. Each year, Johnson uses 60,000 boxes. It costs Johnson $100 to place each order, and the purchase price is $1.92 per box. An analysis indicates that carrying costs are 25% of the purchase price.
Based on the information provided, solve for the values under Johnsons EOQ policy in the following table:
Value | |
---|---|
EOQ for packing boxes | |
Number of orders per year | |
Total ordering cost for the year | |
Total carrying cost for the year | |
Total inventory-related cost per year |
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