Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Littlefield Labs processes blood testing jobs and for each job, a testing kit is used. Littlefield purchases the kits as raw materials from a supplier

Littlefield Labs processes blood testing jobs and for each job, a testing kit is used. Littlefield purchases the kits as raw materials from a supplier at a price of $600 each and the money is immediately deducted from an interest-bearing bank account with an annual interest rate of 6% when an inventory replenishment order is placed with the supplier. An order is placed to the supplier as soon as Littlefield runs out of inventory and for each order, the supplier also charges a fixed shipping cost of $2000 for same-day delivery, regardless of the size of the order.

It is estimated that Littlefield will have an annual demand of 1100 jobs and daily demand is relatively stable over the year. If Littlefield places an EOQ to its supplier every time, what is the expected total annual shipping cost ? 


Step by Step Solution

3.34 Rating (163 Votes )

There are 3 Steps involved in it

Step: 1

Working note Economic order quantity 2annu... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Statistics For Business And Economics

Authors: Paul Newbold, William Carlson, Betty Thorne

8th Edition

0132745658, 978-0132745659

More Books

Students also viewed these Accounting questions