A manufacturing company places a semi-annual order of 24,000units at a price of $20 per unit. Its carrying cost is 15% and theorder cost is $12 per order.Required:1. What is the most economical order quantity?2. How many orders need to be placed?

Given: Semi-Annual orders =24000 units The total order quantity per year (A)=24000*2=48000 units…

Answered: A manufacturing company places a…

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter4: Extent (how Much) Decisions

Section: Chapter Questions

Problem 4.2IP

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A manufacturing company places a semi-annual order of 24,000 units at a price of $20 per unit. Its carrying cost is 15% and the order cost is $12 per order. Required: 1. What is the most economical order quantity? 2. How many orders need to be placed?