The Trektronics store begins each week with 220 phasers in stock. This stock is

Question

The Trektronics store begins each week with 220 phasers in stock. This stock is depleted each week and reordered. The carrying cost per phaser is $17 per year and the fixed order cost is $32. What are the current total carrying costs? (Do not round intermediate calculations.) Carrying costs $ What are the current restocking costs? (Do not round intermediate calculations.) Restocking costs $ What is the economic order quantity? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) EOQ $ Should Trektronics increase or decrease its order size? Decrease Increase How many orders per year will Tektronics place under the new policy? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Orders per year $

Explanation / Answer

1. Current total carrying cost

a) No of units to be maintained in store(220*52 weeks) =11440 units

b) carrying cost (11440*17)=$ 194,480

c) No of orders = 52 orders

d) Ordering cost= 52 * 32=$1,664

Total current carrying cost per year (b+d)=$196,144   

economic order quantity(EOQ) = SQRT(2 × Quantity × Cost Per Order / Carrying Cost Per Order)

=SQRT( 2*11440*32/(196144/52))

=14 units

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