Expected annual demand for Galaxy jerseys 14,000 Ordering cost per purchase order $112 Carrying cost per year $10 per jersey Each jersey costs PS $35 and sells for $70. The $10 carrying cost per jersey per year consists of the required return on investment of $5.95 (17% × $35 purchase price) plus $4.05 in relevant insurance, handling, and storage costs. The purchasing lead time is 5 days. PS Requirement 1. Calculate the EOQ. Begin by selecting the formula used to calculate EOQ. (D=Demand in units for one year, P=Ordering cost per purchase order, C=Carrying cost of one unit in stock, Q=Any order quantity.) ModifyingAbove EOQ equals StartRoot StartFraction 2 DP Over Upper C EndFraction EndRoot With Subscript EOQ=2DPC Part 2 (Round your answer to the nearest whole number.) The EOQ is 560 jerseys. Part 3 Requirement 2. Calculate the number of orders that will be placed each year. Determine the formula used to calculate the number of orders that will be placed each year, then calculate the orders per year. (Round your answer up to the nearest whole number.) Annual demand ÷ EOQ = Number of orders Part 4 ÷ = orders per year is open 365 days a year.
Expected annual demand for Galaxy jerseys 14,000 Ordering cost per purchase order $112 Carrying cost per year $10 per jersey Each jersey costs PS $35 and sells for $70. The $10 carrying cost per jersey per year consists of the required return on investment of $5.95 (17% × $35 purchase price) plus $4.05 in relevant insurance, handling, and storage costs. The purchasing lead time is 5 days. PS Requirement 1. Calculate the EOQ. Begin by selecting the formula used to calculate EOQ. (D=Demand in units for one year, P=Ordering cost per purchase order, C=Carrying cost of one unit in stock, Q=Any order quantity.) ModifyingAbove EOQ equals StartRoot StartFraction 2 DP Over Upper C EndFraction EndRoot With Subscript EOQ=2DPC Part 2 (Round your answer to the nearest whole number.) The EOQ is 560 jerseys. Part 3 Requirement 2. Calculate the number of orders that will be placed each year. Determine the formula used to calculate the number of orders that will be placed each year, then calculate the orders per year. (Round your answer up to the nearest whole number.) Annual demand ÷ EOQ = Number of orders Part 4 ÷ = orders per year is open 365 days a year.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter2: Basic Cost Management Concepts
Section: Chapter Questions
Problem 4CE: Refer to Cornerstone Exercises 2.2 and 2.3. Next year, Pietro expects to produce 50,000 units and...
Related questions
Question
|
Expected annual demand for Galaxy jerseys
|
14,000
|
|---|---|
|
Ordering cost per purchase order
|
$112
|
|
Carrying cost per year
|
$10 per jersey
|
Each jersey costs
is open 365 days a year.
PS
$35
and sells for
$70.
The
$10
carrying cost per jersey per year consists of the required return on investment of
$5.95
(17%
×
$35
purchase price) plus
$4.05
in relevant insurance, handling, and storage costs. The purchasing lead time is
5
days.
PS
Requirement 1. Calculate the EOQ.
Begin by selecting the formula used to calculate
EOQ.
(D=Demand
in units for one year,
P=Ordering
cost per purchase order,
C=Carrying
cost of one unit in stock,
Q=Any
order quantity.)ModifyingAbove EOQ equals StartRoot StartFraction 2 DP Over Upper C EndFraction EndRoot With Subscript EOQ=2DPC
Part 2
(Round your answer to the nearest whole number.)
|
The EOQ is
|
560
|
jerseys.
|
Part 3
Requirement 2. Calculate the number of orders that will be placed each year.
Determine the formula used to calculate the number of orders that will be placed each year, then calculate the orders per year. (Round your answer up to the nearest whole number.)
|
Annual demand
|
÷
|
EOQ
|
=
|
Number of orders
|
Part 4
|
|
÷
|
|
=
|
|
orders per year
|
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