Question

XYZ purchases 20,000 unit of a product each year in lots of 1,000 units per order....

XYZ purchases 20,000 unit of a product each year in lots of 1,000 units per order. The cost of placing an order is $20 and the cost of carrying one unit of product in inventory is $30 per year.

Required:

How many orders is placed per year?

What is the total ordering costs per year?

What is the total carrying cost of the inventory per year?

What is the total cost of carrying and ordering for the year?

What is the EOQ amount? What would the total cost of carrying and ordering be for the year if the EOQ amount was used?

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

1. Number of orders per year = total units purchased/number of units in per order = 20000/1000= 20 orders

2. Total ordering cost = ordering cost per order* number of orders = 20*20=400

3. Total carrying cost = carrying cost per unit*number of units= 30*20000= 600000

4. Total ordering and carrying cost= 400+600000= 600400

5. EOQ= Square root of (2 x demandx ordering cost/carrying cost) = (2*20000*20/30)^(1/2)= 163 units

Total ordering and carrying cost = ((20000/163*20)+(20000*30)= 2454+600000= 602454

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Question 3 EOQ, ORDERING COST, CARRYING COST, AND TOTAL INVENTORY RELATED COST (LO 3) Franklin Company...
Question 3 EOQ, ORDERING COST, CARRYING COST, AND TOTAL INVENTORY RELATED COST (LO 3) Franklin Company purchases 4,500 units of Widgelets each year in lots of 500 units per order. cost of placing one order is $22, and the cost of carrying one unit of product in inventory for a year is $8.80. Required: 1 What is the EOQ for Widgelets? 2 How many orders for Widgelets will Franklin place per year under the EOQ policy? 3 What is the...
1.XYZ is a retailer and sells 144,000 units per year. It purchases from a single supplier. Fixed...
1.XYZ is a retailer and sells 144,000 units per year. It purchases from a single supplier. Fixed costs per order are $846 and carrying cost is $8 per unit. How many units should XYZ purchase per order? That is, what is the Economic Order Quantity 2.XYZ is a retailer and sells 144,000 units per year. It purchases from a single supplier. Fixed costs per order are $897 and carrying cost is $10 per unit per year. In economic order quantity model, what...
Economic Order Quantity Ottis, Inc., uses 731,025 plastic housing units each year in its production of...
Economic Order Quantity Ottis, Inc., uses 731,025 plastic housing units each year in its production of paper shredders. The cost of placing an order is $30. The cost of holding one unit of inventory for one year is $15. Currently, Ottis places 171 orders of 4,275 plastic housing units per year. Required: 1. Compute the economic order quantity. units 1,710 2. Compute the ordering, carrying, and total costs for the EOQ. Ordering cost $__________ Carrying cost 12,825 Total cost $__________...
URGENT A, If EOQ of a company is 1,000 units, holding cost per unit per year...
URGENT A, If EOQ of a company is 1,000 units, holding cost per unit per year is Rs.10. What is total ordering cost?            [2 Marks] B, COMPANY annually consumes 10,000 units of component P. The carrying cost of this component is Rs.2 per unit per year and the ordering costs are Rs.100 per order. PoMA uses an order quantity of 500 units. The company operates 200 days per year, and the lead time for ordering component P is 14 days....
XYZ is a retailer and sells 162,000 units per year. It purchases from a single supplier....
XYZ is a retailer and sells 162,000 units per year. It purchases from a single supplier. Fixed costs per order are $931 and carrying cost is $14 per unit per year. In economic order quantity model, what would be the lowest total inventory cost? That is, the lowest sum of total carrying cost and total shortage cost.  
XYZ is a retailer and sells 198,000 units per year. It purchases from a single supplier....
XYZ is a retailer and sells 198,000 units per year. It purchases from a single supplier. Fixed costs per order are $895 and carrying cost is $12 per unit. How many units should XYZ purchase per order? That is, what is the Economic Order Quantity?
a company decides to establish an EOQ for an item. The annual demand is 200,000 units....
a company decides to establish an EOQ for an item. The annual demand is 200,000 units. The ordering costs are $40 per order, and inventory-carrying costs are $2 per unit per year. Calculate the following: A. The EOQ in units. B. Number of orders per year. C. Annual ordering cost, annual holding cost, and annual total cost.
Knutson Products Inc. is involved in the production of airplane parts and has the following​ inventory,...
Knutson Products Inc. is involved in the production of airplane parts and has the following​ inventory, carrying, and storage​ costs: 1. Orders must be placed in round lots of 100 units. 2. Annual unit usage is150,000. ​(Assume a​ 50-week year in your​ calculations.) 3. The carrying cost is 25 percent of the purchase price. 4. The purchase price is ​$10 per unit. 5. The ordering cost is ​$200 per order. 6. The desired safety stock is 4000 units.​ (This does...
Knutson Products Inc. is involved in the production of airplane parts and has the following​ inventory,...
Knutson Products Inc. is involved in the production of airplane parts and has the following​ inventory, carrying, and storage​ costs: 1. Orders must be placed in round lots of 100 units. 2. Annual unit usage is 250,000 ​(Assume a​ 50-week year in your​ calculations.) 3. The carrying cost is 15 percent of the purchase price. 4. The purchase price is ​$20 per unit. 5. The ordering cost is ​$400 per order. 6. The desired safety stock is 8,000 units.​ (This...
Rambo Ltd. orders 500 units at a time, and places 30 orders per year. Total ordering...
Rambo Ltd. orders 500 units at a time, and places 30 orders per year. Total ordering cost is $3,200 and total carrying cost is $2,500. Which of the following statements is true? Total inventory-related cost is lower than it would be at the economic order quantity (EOQ). The economic order quantity (EOQ) is 500. The economic order quantity (EOQ) is less than 500. The economic order quantity (EOQ) is more than 500.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT