Economic Order Quantity Ottis, Inc., uses 585,225 plastic housing units each year in its production of paper shredders. The cost of placing an order is $42. The cost of holding one unit of inventory for one year is $21. Currently, Ottis places 153 orders of 3,825 plastic housing units per year. Required: 1. Compute the economic order quantity. fill in the blank 1 units 2. Compute the ordering, carrying, and total costs for the EOQ. Ordering cost $fill in the blank 2 Carrying cost  fill in the blank 3 Total cost $fill in the blank 4 3. How much money does using the EOQ policy save the company over the policy of purchasing 3,825 plastic housing units per order? Round your answer to the nearest dollar $fill in the blank

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 7E: Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The...
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Economic Order Quantity

Ottis, Inc., uses 585,225 plastic housing units each year in its production of paper shredders. The cost of placing an order is $42. The cost of holding one unit of inventory for one year is $21. Currently, Ottis places 153 orders of 3,825 plastic housing units per year.

Required:

1. Compute the economic order quantity.

fill in the blank 1 units

2. Compute the ordering, carrying, and total costs for the EOQ.

Ordering cost $fill in the blank 2
Carrying cost  fill in the blank 3
Total cost $fill in the blank 4

3. How much money does using the EOQ policy save the company over the policy of purchasing 3,825 plastic housing units per order? Round your answer to the nearest dollar

$fill in the blank 5

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