Question

Miguel was is the process of completing the quarterly planning for the purchasing department when a major computer malfunction lost most of his data. He was able to recover the following:

Orders per year	40
Average daily demand	48
Working days per year	250
Annual ordering costs	$                  4,000
Annual carrying costs	$30/unit

Miguel purchases at the EOQ quantity level.

a.      Determine the annual demand (1 mark)

b.      Determine the cost of placing an order (1 mark)

c.       Calculate the EOQ (2 mark)

d.      Calculate the annual ordering costs (1 mark)

e.      Calculate the annual carrying costs (1 mark)

Answer 1

Note: Average Inventory level is not given in the given Question. So, Average Inventory level (Average stock) is 50% Order Size