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Morgan Company's annual demand for Model X253 is 19,000 units. The company is unsure about the relevant carrying cost per unit per year and
Morgan Company's annual demand for Model X253 is 19,000 units. The company is unsure about the relevant carrying cost per unit per year and the relevant ordering cost per purchase order. The accompanying table presents six possible combinations of carrying and ordering costs (Click the icon to view the table) Required 1. Determine the economic order quantity (EOQ) for each of the relevant ordering and carrying cost alternatives 2. How does your answer to requirement 1 give insight into the impact on EQQ of changes in relevant ordering and carrying costs? Requirement 1. Determine the economic order quantity (EOQ) for each of the relevant ordering and carrying cost alternatives Begin by selecting the formula used to calculate EOQ (D=Demand in units for one year, POrdering cost per purchase onder C-Carrying cost of one unit in stock. Any order quantity) Using the formula selected above, calculate the EOQ for each of the relevant ordering and carrying cost alternatives (Round your answers to the nearest unt) Relevant carrying costs per unit per year 5 $ S $ 10. 16 201 Relevant ordering costs per purchase order 380 $ 280 Requirement 2. How does your answer to requirement 1 give insight into the impact on EOQ of changes in relevant ordering and carrying costs? For a given demand level, as relevant carrying costs increase, EOQ becomes For a given demand level, as relevant order costs increase, EOQ Table Relevant Carrying Cost per Unit per Year Relevant Ordering Cost per Purchase Order $ 69 10 $ 380 69 $ 10 $ 280 $ 16 69 $ 380 69 $ 16 $ 280 69 $ 20 $ 380 $ 20 $ 280 - X
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