FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Net Steels is a steel manufacturing company. It currently orders 180 metric tons of raw material per order. It was
observed that the company often faces stockout. To tackle this issue, the company incorporated a fixed-quantity system
(FQS) and collected the following data.
Demand
Order Cost
Item Cost
12000 metric tons per year
$16000 per order
$35000 per year
20 percent per year
Inventory-Holding Cost
Using the data to determine the EOQ. Only for non-integer results, round your answer UP to the nearest integer. For
example, if your answer is 5.05, type 6; if your answer is 5, type 5.
The formula is as follows.
2DCO
Economic Order Quantity (EOQ), Q* =
Ch
Reorder point, r = demand rate x lead time = d L
Your Answer:
Answer
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Transcribed Image Text:Net Steels is a steel manufacturing company. It currently orders 180 metric tons of raw material per order. It was observed that the company often faces stockout. To tackle this issue, the company incorporated a fixed-quantity system (FQS) and collected the following data. Demand Order Cost Item Cost 12000 metric tons per year $16000 per order $35000 per year 20 percent per year Inventory-Holding Cost Using the data to determine the EOQ. Only for non-integer results, round your answer UP to the nearest integer. For example, if your answer is 5.05, type 6; if your answer is 5, type 5. The formula is as follows. 2DCO Economic Order Quantity (EOQ), Q* = Ch Reorder point, r = demand rate x lead time = d L Your Answer: Answer
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