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TCMDiagnosticsInc. procuresitsannualrequirementof180000unitsofamedicaldevicein6installments.EachunitcostsR500andtheorderingcostisR5000.Theinventoryholdingcostisestimatedat10%ofunitvalue. Required: Computetheeconomicorderquantityoftheproduct. (3) Computethetotalannualcostoftheexistinginventorypolicy. (3) Howmuchmoneycan TCMInc. savebyreplacingtheexistinginventorypolicywiththeeconomicorderquantity(EOQ)model? (4)

TCMDiagnosticsInc.procuresitsannualrequirementof180000unitsofamedicaldevicein6installments.EachunitcostsR500andtheorderingcostisR5000.Theinventoryholdingcostisestimatedat10%ofunitvalue.

Required:

  1. Computetheeconomicorderquantityoftheproduct. (3)

  1. Computethetotalannualcostoftheexistinginventorypolicy. (3)

  1. HowmuchmoneycanTCMInc.savebyreplacingtheexistinginventorypolicywiththeeconomicorderquantity(EOQ)model? (4)

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