Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Tim is a purchasing agent for computer store and has recently added a new computer model to store's catalog. Current sales are running at about
Tim is a purchasing agent for computer store and has recently added a new computer model to store's catalog. Current sales are running at about 13 computers per week. Time purchases the computer directly from the manufacturer at a unit cost of $ 3000 and the shipments take about a week to arrive. Tim routinely uses EOQ model to determine the stock level and buying frequency. He has estimated that his inventory carrying cost is 20% and ordering cost is $ 75 per order. a. Currently, Tim is ordering 26 models per order; what would be his ordering frequency and what is total cost to him. b. Is this consistent with the EOQ model? If not, what should he be ordering; what's lot size, how frequently should he order and what's annual inventory cost
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started