(i) Electronics Ltd manufactures air conditioners. It purchases 200,000 units of a particular type of compressor part, CU30, each year at a cost of $64 per unit. Annual carrying cost (for insurance, material handling, breakage etc) per unit is 5% of the unit purchase price. Currently Electronics Ltd places 50 orders for 4,000 units each year and ordering costs per purchase order are $18. d) Calculate the EOQ. e) What is the minimum ordering cost? f) What is the minimum storage cost?

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Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints
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Problem 8E: Melchar Company uses 78,125 pounds of oats each year. The cost of placing an order is 18, and the...
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(i) Electronics Ltd manufactures air conditioners. It purchases 200,000 units of a particular type of compressor part, CU30, each year at a cost of $64 per unit. Annual carrying cost (for insurance, material handling, breakage etc) per unit is 5% of the unit purchase price. Currently Electronics Ltd places 50 orders for 4,000 units each year and ordering costs per purchase order are $18.


d) Calculate the EOQ.
e) What is the minimum ordering cost?
f) What is the minimum storage cost?

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