An auto parts supplier sells Hardy-brand batteries to car dealers and auto mechanics. The annual demand is approximately 1500 batteries. The supplier pays 25 R.O for each battery and estimates that the annual holding cost is 30% of the battery's value. It costs approximately 30 R.0 to place an order. The supplier currently orders 125 batteries per month. a. Determine the EOQ. b. How many orders will be placed per year using the EOQ? c. Determine the total cost for the current order quantity. d. Determine the total inventory cost for the EOQ, How has ordering cost changed?
An auto parts supplier sells Hardy-brand batteries to car dealers and auto mechanics. The annual demand is approximately 1500 batteries. The supplier pays 25 R.O for each battery and estimates that the annual holding cost is 30% of the battery's value. It costs approximately 30 R.0 to place an order. The supplier currently orders 125 batteries per month. a. Determine the EOQ. b. How many orders will be placed per year using the EOQ? c. Determine the total cost for the current order quantity. d. Determine the total inventory cost for the EOQ, How has ordering cost changed?
Chapter15: Managing Short-term Assets
Section: Chapter Questions
Problem 19PROB
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Transcribed Image Text:Question No.6:
An auto parts supplier sells Hardy-brand batteries to car dealers and auto mechanics. The
annual demand is approximately 1500 batteries. The supplier pays 25 R.O for each battery
and estimates that the annual holding cost is 30% of the battery's value. It costs
approximately 30 R.o to place an order. The supplier currently orders 125 batteries per
month.
a. Determine the EOQ.
b. How many orders will be placed per year using the EOQ?
c. Determine the total cost for the current order quantity.
d. Determine the total inventory cost for the EOQ, How has ordering cost changed?
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