Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

SECTION B A company uses 5000 items per annum which has a price of $2 each. The ordering costs are $150 per order and holding

image text in transcribed
SECTION B A company uses 5000 items per annum which has a price of $2 each. The ordering costs are $150 per order and holding costs are $1.50 per item per annum. (a). Calculate the EOQ (3 marks) (b). Using the EOQ as the number of items ordered, calculate the i. number of orders per annum (1 mark) ii. average stock (1 mark) ili. annual stock holding cost (2 marks) iv. annual order cost (2 marks) v. total annual inventory cost (2 marks) vi. total annual cost of items and inventory (2 marks) (c). The company is offered a 5% discount (discounted price is $1.90) for orders of 5000 and over. Order cost and holding cost remain at $150 per order and $1.50 respectively. Assuming that the company orders 5000 items per order, calculate the: i. number of orders per annum (1 mark) ii. average stock (1 mark) iii. annual stock holding cost (2 marks) iv. annual order cost (2 marks) v. annual inventory cost (2 marks) vi. total annual cost of items and inventory (2 marks) (d). Which of the two quantities should the company decide on to minimize the total annual cost. (2 marks) (Total 25 marks) (2)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

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

Modeling the Dynamics of Life Calculus and Probability for Life Scientists

Authors: Frederick R. Adler

3rd edition

840064187, 978-1285225975, 128522597X, 978-0840064189

More Books

Students also viewed these Mathematics questions

Question

6.3 Discuss the nature of the whole channel concept.

Answered: 1 week ago