Bond carries a part that is popular in the manufacture of automatic sprayers. Demand for this part is 4,000 units per year; order costs amount to P30 per order, and holding costs total P1.50 per unit. Bond currently places four orders per year with its suppliers. Management is considering the implementation of an economic order quantity model in an effort to better manage its inventories. Compute total annual inventory costs if Bond follows the EOQ policy.
Bond carries a part that is popular in the manufacture of automatic sprayers. Demand for this part is 4,000 units per year; order costs amount to P30 per order, and holding costs total P1.50 per unit. Bond currently places four orders per year with its suppliers. Management is considering the implementation of an economic order quantity model in an effort to better manage its inventories. Compute total annual inventory costs if Bond follows the EOQ policy.
Chapter18: The Management Of Accounts Receivable And Inventories
Section: Chapter Questions
Problem 20P
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