ul economic order quantity (EOQ) for each inventory product. $350 10.00 $32.00 $
ID: 2549697 • Letter: U
Question
ul economic order quantity (EOQ) for each inventory product. $350 10.00 $32.00 $63.00 $500 $9.50 $430 $15.70 late the econo ario been attending a small and medium-sized companies trade confere ry management. You have gathered and shared the following in you have been attendi mpanies trade conference where one of the topics the following information on cutting tools: Alton Ltd 5,000 $7.50 $500.00 West Industries Ltd. 12,000 $4.50 $375.00 Niagara Supplies Ltd Quantity of tools sold each year Annual unit holding cost Cost of placing an order 7,500 $6.75 $425.00 Required: (a) Calculate the EOQ for cutting tools for each company. Calculate the number of orders per year. Round up to the nearest unit. 26 You are looking at changing the credit policy on credit sales from n60 to either n30 or n45 You have gathered the f s and sles lection period is decreased, you can expect decreases in average accounts receivable, the opportunExplanation / Answer
ALTON LIMITED
D = 5000 Units
P = $500,
C = $7.50
(a)Economic Order Quantity = [ ( 2 x D x P ) /C ]1/2
= [ ( 2 x 5000 x 500 ) / 7.50] 1/2
Economic Order Quantity = 816 Units
(b)Number of orders per year = Demand / EOQ
= 5000 / 816
= 6 Orders per year
WEST INDUSTRIES LIMITED
D = 12000 Units
P = $375
C = $4.50
(a)Economic Order Quantity = [ ( 2 x D x P ) /C ]1/2
= [ ( 2 x 12000 x 375 ) / 4.5] 1/2
Economic Order Quantity = 1414 Units
(b)Number of orders per year = Demand / EOQ
= 12000 /1414
= 8 Orders per year
NIAGARA SUPPLIERS LIMITED
D = 7500 Units
P = $425
C = $6.75
(a)Economic Order Quantity = [ ( 2 x D x P ) /C ]1/2
= [ ( 2 x 7500 x 425 ) / 6.75] 1/2
Economic Order Quantity = 972 Units
(b)Number of orders per year = Demand / EOQ
= 7500 /972
= 8 Orders per year
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