A company produces motor bikes. It needs 5400 tires every year. It buys tires from a supplier for OMR 20 per tire. The company’s inventory carrying cost is estimated to be 20% of purchase cost and the ordering cost is OMR 50 per order. Calculate: (A) Economic Ordering Quantity. (B) Minimum total inventory cost per year. (C) Ordering quantity for each month (D) Average inventory at any time (E) Optimum order interval (F) Write complete conclusion Example 2:A company produces motor bikes. It needs 5400 tires every year. It buys tires froma supplier for OMR 20 per tire. The company's inventory carrying cost is estimatedto be 20% of purchase cost and the ordering cost is OMR 50 per order. Calculate:(A) Economic Ordering Quantity.(B) Minimum total inventory cost per year.(C) Ordering quantity for each month(D) Average inventory at any time(E) Optimum order intervalCSwae cooplete looncusiocanner

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Answered: Example 2: A company produces motor…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter23: Other Topics In Working Capital Management

Section: Chapter Questions

Problem 1P

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A company produces motor bikes. It needs 5400 tires every year. It buys tires from a supplier for OMR 20 per tire. The company’s inventory carrying cost is estimated to be 20% of purchase cost and the ordering cost is OMR 50 per order. Calculate: (A) Economic Ordering Quantity. (B) Minimum total inventory cost per year. (C) Ordering quantity for each month (D) Average inventory at any time (E) Optimum order interval (F) Write complete conclusion

Example 2:
A company produces motor bikes. It needs 5400 tires every year. It buys tires from
a supplier for OMR 20 per tire. The company's inventory carrying cost is estimated
to be 20% of purchase cost and the ordering cost is OMR 50 per order. Calculate:
(A) Economic Ordering Quantity.
(B) Minimum total inventory cost per year.
(C) Ordering quantity for each month
(D) Average inventory at any time
(E) Optimum order interval
CSwae cooplete looncusiocanner

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