Clap Off Manufacturing uses 1,600 switch assemblies per week and then reorders a

Question

Clap Off Manufacturing uses 1,600 switch assemblies per week and then reorders another 1,600. Assume the relevant carrying cost per switch assembly is $5.30 and the fixed order cost is $590. (Enter your answer as directed, but do not round intermediate calculations.)

Clap Off Manufacturing uses 1,600 switch assemblies per week and then reorders another 1,600. Assume the relevant carrying cost per switch assembly is $5.30 and the fixed order cost is $590. (Enter your answer as directed, but do not round intermediate calculations.)

Explanation / Answer

a)

Carrying costs:

= 1,600×52×$5.30

= $440,960

b)

Restocking costs:

= 52×$590

= $30,680

c)

Economic ordering quantity:

= (2×Annual requirement×buying cost per order÷Carrying cost per unit)^(1÷2)

= (2×1,600×52×$590÷$5.30)^(1÷2)

= 596.85 units

d)

Number of orders:

= 1,600×52÷596.85 units

= 139.39 orders

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