Respuesta :
Answer:
a. 650 units
b 130 units
c 325 units
d. $1,040
Explanation:
a. The computation of the economic order quantity is shown below:
= [tex]\sqrt{\frac{2\times \text{Annual demand}\times \text{Ordering cost}}{\text{Carrying cost}}}[/tex]
= [tex]\sqrt{\frac{2\times \text{\$84,500}\times \text{\$4}}{\text{\$1.60}}}[/tex]
= 650 units
b. The number of orders would be equal to
= Annual demand ÷ economic order quantity
= $84,500 ÷ 650 units
= 130 orders
c. The average inventory would equal to
= Economic order quantity ÷ 2
= 650 units ÷ 2
= 325 units
d. The total cost of ordering cost and carrying cost equals to
Ordering cost = Number of orders × ordering cost per order
= 130 orders × $4
= $520
Carrying cost = average inventory × carrying cost per unit
= 325 units × $1.60
= $520
So, the total would be
= $520 + $520
= $1,040
