Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The cost of placing an order is $30. The cost of holding one unit of inventory for one year is $15.00. Currently, Ottis places 160 orders of 4,000 plastic housing units per year.Compute the economic order quantity. Economic order quantity = 1600Compute the ordering, carrying, and total costs for the EOQ.How much money does using the EOQ policy save the company over the policy of purchasing 4,000 plastic housing units per order?

Inventory management is the process of ordering, carrying, selling company ' s inventory. Economic…

Answered: Ottis, Inc., uses 640,000 plastic…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

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Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The cost of placing an order is $30. The cost of holding one unit of inventory for one year is $15.00. Currently, Ottis places 160 orders of 4,000 plastic housing units per year.

Compute the economic order quantity.
Economic order quantity = 1600
Compute the ordering, carrying, and total costs for the EOQ.
How much money does using the EOQ policy save the company over the policy of purchasing 4,000 plastic housing units per order?

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