The demand for a product is 12,500 units for a three-month period. Each unit of product has a purchase price of $15 and ordering costs are $20 per order placed. The annual holding cost of one unit of product is 10% of its purchase price.What is the Economic Order Quantity (to the nearest unit)?
A. 1,577
B. 1,816
C. 1,866
D. 1,155
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A company uses the Economic Order Quantity (EOQ) model to establish reorder quantities. The following information relates to the forthcoming period:Order costs = $25 per orderHolding costs = 10% of purchase price = $4/unitAnnual demand = 20,000 unitsPurchase price = $40 per unitEOQ = 500 unitsNo safety stocks are held.What are the total annual costs of stock (i.e. the total purchase cost plus total order cost plus total holding cost)?
A. $22,000
B. $33,500
C. $802,000
D. $803,000
(EOQ) model. What would be the effects on the EOQ and the total annual ordering cost of an increase in the annual cost of holding one unit of the component in stock?
A. EOQTotal annual ordering costLowerHigher
B. HigherLower
C. LowerNo effect
D. HigherNo effect
A company uses components at the rate of 600 units per month, which are bought in at a cost of $2.24 each from the supplier. It costs $8.75 each time to place an order, regardless of the quantity ordered. The supplier offers a 5% discount on the purchase price for order quantities of 2 000 items or more. The current EOQ is 750 units. The total holding cost is 10% per annum of the value of inventory held.What is the change in total cost to the company of moving to an order quantity of 2,000 units?
A. $601 additional cost
B. $730 additional cost
C. $730 saving
D. $601 saving
What is the economic batch quantity used to establish?
A. Optimal quantity to be manufactured
B. Optimal reorder quantity
C. Optimal reorder level
D. Maximum inventory level