Ergonomics Inc. sells ergonomically designed office chairs. The company has the following information:Average demand = 36 units per dayAverage lead time = 50 daysItem unit cost = $70 for orders of less than 400 unitsItem unit cost = $68 for orders of 400 units or moreOrdering cost = $45Inventory carrying cost = 25%The business year is 250 daysAssume there is no uncertainty at all about the demand or the lead time. Calculate EOQ if unit cost is $70 and $68. (Note: These EOQs do not need to be feasible in theirprice range.) (Round up your answers to the next whole number.) EOQUnit cost at $70 unitsUnit cost at $68 units Calculate annual ordering costs for each alternative? (For the first value, use your rounded EOQ from Part a. For the second value, use the lowest feasible order quantity needed to qualify for that price level. Round your answers to 2 decimal places.) Annual Ordering CostUnit cost at $70 Unit cost at $68

EOQ is the technique to order the optimal quantity so that total costs are minimized.

Answered: Calculate EOQ if unit cost is $70 and…

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Question

Ergonomics Inc. sells ergonomically designed office chairs. The company has the following information:

Average demand = 36 units per day

Average lead time = 50 days

Item unit cost = $70 for orders of less than 400 units

Item unit cost = $68 for orders of 400 units or more

Ordering cost = $45

Inventory carrying cost = 25%

The business year is 250 days

Assume there is no uncertainty at all about the demand or the lead time.

Calculate EOQ if unit cost is $70 and $68. (Note: These EOQs do not need to be feasible in theirprice range.) (Round up your answers to the next whole number.)

Calculate annual ordering costs for each alternative? (For the first value, use your rounded EOQ from Part a. For the second value, use the lowest feasible order quantity needed to qualify for that price level. Round your answers to 2 decimal places.)