Louise Manufacturing uses 2,500 switch assemblies per week and then reorders another 2,500. The...

Question:

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.)

Carrying costs $

2. What are the order costs?

(Do not round intermediate calculations.)

Order costs $_

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

EOQ:

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:

Question 1)

Carrying cost = Average Inventory x Carrying cost per unit

In the question,

Average inventory = Max Inventory / 2 = 2500 / 2 = 1250...

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