Louise Manufacturing uses 2,500 switch assemblies per week and then reorders another 2,500.
The relevant carrying cost per switch assembly is $10.00, and the fixed order cost is $1,250.
1. What are the current carrying costs? (Do not round intermediate calculations.)
2. What are the order costs?
(Do not round intermediate calculations.)
3. Calculate the economic order quantity. (Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.)
EOQ or the economic order quantity is the optimal level of inventory where the total inventory costs are the minimum. The total inventory costs include the purchase cost, ordering cost and the carrying costs.
Answer and Explanation:
Carrying cost = Average Inventory x Carrying cost per unit
In the question,
Average inventory = Max Inventory / 2 = 2500 / 2 = 1250...
See full answer below.
Become a member and unlock all Study Answers
Try it risk-free for 30 daysTry it risk-free
Ask a question
Our experts can answer your tough homework and study questions.Ask a question Ask a question
Learn more about this topic:
from Business 112: Operations ManagementChapter 17 / Lesson 6