Question
Rudd Company uses 40,000 micro-chips each year in its production of digital cameras. The cost of placing an order is $75. The cost of holding
Rudd Company uses 40,000 micro-chips each year in its production of digital cameras. The cost of placing an order is $75. The cost of holding one unit of inventory for one year is $8. Currently Rudd places 20 orders of 2,000 units per order. Required: A. B. C. Compute the annual ordering cost. Compute the annual carrying cost. Compute the total cost of Rudd's current inventory policy. D. Compute the economic order quantity. E F Compute the order cost and the carrying cost for the EOQ. How much money does using the EOQ policy save the company over the policy of purchasing 2,000 micro-chips per order
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