The Trektronics store begins each week with 260 phasers in stock. This stock is

Question

The Trektronics store begins each week with 260 phasers in stock. This stock is depleted each week and reordered. The carrying cost per phaser is $27 per year and the fixed order cost is $54. 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

Answer: Calculation of the Total Carrying cost:

Total carrying costs=Average inventory*Carrying cost per unit

=(260/2)*$27=$3510

Answer: The order costs are the number of orders times the cost of an order, so:

Restocking costs = 58.14($54) = $3139.56

Answer: EOQ=Square root of [(2*260*52 weeks*$54)/$27]

=232.55 units

Answer: The number of orders per year will be the total units sold per year divided by the EOQ, so:

=260*52/232.55=58.14 order

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