Question
Massa Machine Tool expects total sales of $60,000. The price per unit is $10. The firm estimates an ordering cost of $25 per order, with
Massa Machine Tool expects total sales of $60,000. The price per unit is $10. The firm estimates an ordering cost of $25 per order, with an inventory cost of $0.70 per unit.
a)What is the optimum order size?
2 x 6000 x 25/.70
= 655 units
b)What is average inventory under EOQ?
c)Calculate total annual inventory cost under EOQ.
d)How many orders will be placed a year?
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Principles of Managerial Finance
Authors: Chad J. Zutter, Scott B. Smart
15th edition
013447631X, 134476315, 9780134478197 , 978-0134476315
