ABC Corporation has got a demand for particular part at 12500 units per year. Shortages are not permitted. The cost per unit is SR 5 and it cost SR 125 to place an order and to process the delivery. The inventory carrying cost is estimated at 10% of average inventory investment. Determine: (i) The economic order guantity (EOQ). (ii) Optimum numbers of orders to be placed per year, (iii) Optimum period of supply per order. (iv) Minimum total inventory carrying cost per annum.

ABC Corporation has got a demand for particular part at 12500 units per year. Shortages are not permitted. The cost per unit is SR 5 and it cost SR 125 to place an order and to process the delivery. The inventory carrying cost is estimated at 10% of average inventory investment. Determine: (i) The economic order guantity (EOQ). (ii) Optimum numbers of orders to be placed per year, (iii) Optimum period of supply per order. (iv) Minimum total inventory carrying cost per annum.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter14: Pricing Techniques And Analysis

Section: Chapter Questions

Problem 7E

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