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Ottis, Inc., uses 632,025 plastic housing units each year in its production of paper shredders. The cost of placing an order is $24. The cost of holding one unit of inventory for one year is $12. Currently, Ottis places 159 orders of 3,975 plastic housing units per year. Required: 1. Compute the economic order quantity. units 2. Compute the ordering, carrying, and total costs for the EOQ. Ordering cost Carrying cost Total cost 3. How much money does using the EOQ policy save the company over the policy of purchasing 3,975 plastic housing units per order? Round your answer to the nearest dollar

Ottis, Inc., uses 632,025 plastic housing units each year in its production of paper shredders. The cost of placing an order is $24. The cost of holding one unit of inventory for one year is $12. Currently, Ottis places 159 orders of 3,975 plastic housing units per year. Required: 1. Compute the economic order quantity. units 2. Compute the ordering, carrying, and total costs for the EOQ. Ordering cost Carrying cost Total cost 3. How much money does using the EOQ policy save the company over the policy of purchasing 3,975 plastic housing units per order? Round your answer to the nearest dollar

Cornerstones of Cost Management (Cornerstones Series)
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 632,025 plastic housing units each year in its production of paper shredders. The cost of placing an order is $24. The cost of holding one unit of inventory for one year is $12. Currently, Ottis places 159 orders of 3,975 plastic housing units per year. Required: 1. Compute the economic order quantity. units 2. Compute the ordering, carrying, and total costs for the EOQ. Ordering cost Carrying cost Total cost 3. How much money does using the EOQ policy save the company over the policy of purchasing 3,975 plastic housing units per order? Round your answer to the nearest dollar
Transcribed Image Text:Economic Order Quantity Ottis, Inc., uses 632,025 plastic housing units each year in its production of paper shredders. The cost of placing an order is $24. The cost of holding one unit of inventory for one year is $12. Currently, Ottis places 159 orders of 3,975 plastic housing units per year. Required: 1. Compute the economic order quantity. units 2. Compute the ordering, carrying, and total costs for the EOQ. Ordering cost Carrying cost Total cost 3. How much money does using the EOQ policy save the company over the policy of purchasing 3,975 plastic housing units per order? Round your answer to the nearest dollar
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