ACE processing company uses 2,400 units of a product per year on a continuous basis. The product carrying costs are 60 per year and ordering costs are 252.05 per order. It takes 20 days to receive a shipment after an order is placed and the firm requires a safety stock of 8 days of usage in inventory. (a) Calculate the economic order quantity. (b) Calculate the total cost per year to order and carry this item.
ACE processing company uses 2,400 units of a product per year on a continuous basis. The product carrying costs are 60 per year and ordering costs are 252.05 per order. It takes 20 days to receive a shipment after an order is placed and the firm requires a safety stock of 8 days of usage in inventory. (a) Calculate the economic order quantity. (b) Calculate the total cost per year to order and carry this item.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints
Section: Chapter Questions
Problem 8E: Melchar Company uses 78,125 pounds of oats each year. The cost of placing an order is 18, and the...
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ACE processing company uses 2,400 units of a product per year on a continuous basis. The product carrying costs are 60 per year and ordering costs are 252.05 per order. It takes 20 days to receive a shipment after an order is placed and the firm requires a safety stock of 8 days of usage in inventory.
(a) Calculate the economic order quantity.
(b) Calculate the total cost per year to order and carry this item.
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