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The Purchasing Manager of Pelham Toys purchases $300,000 of inventory every year. Each piece of inventory costs $3.00 to buy from the supplier. In addition,
The Purchasing Manager of Pelham Toys purchases $300,000 of inventory every year. Each piece of inventory costs $3.00 to buy from the supplier. In addition, the manager did an activity-based costing study and found that each order she places costs her $25.00 and each item costs $5.00 per year in storage costs. She orders 2,000 units every time she places an order. Required: A. Under the current inventory management system, I How many orders does the Purchasing Manager place in a year? II What is the total annual cost (in dollars) of placing orders? iil What is the total annual cost (in dollars) of carrying inventory? B If she based her purchasing pattern on the Economic Order Quantity (EOQ) model: I What is the order quantity that is most economical for the company (EOQ)? ii How many orders would the Purchasing Manager iii What is the total annual cost (in dollars) of placing iv What is the total annual cost (in dohisrs) of carrying inventory? I How many orders does the Purchasinn Manamar..ta... 1. pear? II What is the total annual cost (in dollars) of placing orders? fround your answer to zero decimal places) III What is the total annual cost (in dollars) of carrying inventory? fround your answer to zero decimal placess) B If she based her purchasing pattern on the Economic Order Quantity (EOQ) model: 1 What is the order quantity that is most economical for the company (EOQ)? (round your answerio zero decimal places) ii How many orders would the Purchasing Manager (round your answer to zero decimal places) iii What is the total annual cost (in dollars) of placing round your answer to zero decimal places, iv What is the total annual cost (in dollars) of carrying inventory? (round your answer to zero decimal ploces)
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