A company requires 8,000 units of material A per month. The cost per order is $950 and the holding costs of inventory are $1.45 per unit per year. Required:- Investigate the total cost of buying the material in quantities of 4,000, 5,000 and 7,000 units at a time. Which is the cheapest option?
A company requires 8,000 units of material A per month. The cost per order is $950 and the holding costs of inventory are $1.45 per unit per year. Required:- Investigate the total cost of buying the material in quantities of 4,000, 5,000 and 7,000 units at a time. Which is the cheapest option?
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints
Section: Chapter Questions
Problem 6E: Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The...
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A company requires 8,000 units of material A per month. The cost per
order is $950 and the holding costs of inventory are $1.45 per unit per
year.
Required:-
Investigate the total cost of buying the material in quantities of 4,000,
5,000 and 7,000 units at a time. Which is the cheapest option?
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