Question
Longroad Traders is one of the largest truck dealers in Kalgoorlie and sells about 2,800 recreational vehicles a year. The cost of placing an order
Longroad Traders is one of the largest truck dealers in Kalgoorlie and sells about 2,800 recreational vehicles a year. The cost of placing an order with Longroad Traders' supplier is $800, and the inventory-carrying costs are $150 for each truck. The company likes to maintain safety stock of 12 trucks. Most of their sales are either in spring or the summer.
Required:
(a) | What is the economic order quality (EOQ)? | (3 marks) |
(b) | How many orders will the company need to place this year? | (3 marks) |
(C) | What is the total inventory cost | (3 marks) |
(d) | Give three examples of opportunity costs that are typically not recorded in accounting systems, although they are relevant when using the EOQ model. | (3 marks) |
(e) | Outline some of the issues with the assumptions associated with EOQ. | (3 marks) |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
