Clap Off Manufacturing uses 3,000 switch assemblies per week and then reorders a

Question

Clap Off Manufacturing uses 3,000 switch assemblies per week and then reorders another 3,000. Assume the relevant carrying cost per switch assembly is $6.70 and the fixed order cost is $535. (Enter your answer as directed, but do not round intermediate calculations.)

Clap Off Manufacturing uses 3,000 switch assemblies per week and then reorders another 3,000. Assume the relevant carrying cost per switch assembly is $6.70 and the fixed order cost is $535. (Enter your answer as directed, but do not round intermediate calculations.)

Explanation / Answer

a>Carrying Cost=Average Inventory*Unit Carrying cost=(3000/2)*6.70= 10050 b>Restoking cost=No of orders in a year*order cost=52*535= 27820 c>EOQ=Square Root(2AB/C),Where A=Annual Requirement,B=Ordering Cost,C=Carrying Cost, EOQ=Square Root(2*3000*52*535/6.7) 3246.6 or say 3250 d>EOQ Number of orders=(3000*52)/3250 48

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