The following information pertains to Lannister Manufacturing Corporation’s Product Y: Annual Demand 33,750 units Annual cost to hold one unit of inventory P15 Setup cost (or the cost to initiate a production run) P500 Beginning Inventory of Product Y - 0 - At present, the company produces 2,250 units of Product X per production run, for a total of 15 production runs per year. The company is considering to use the EOQ model to determine the economic lot size and the number of production runs that will minimize the total inventory carrying cost and setup cost for Product Y If the EOQ model is used, what is the economic lot size?
The following information pertains to Lannister Manufacturing Corporation’s Product Y: Annual Demand 33,750 units Annual cost to hold one unit of inventory P15 Setup cost (or the cost to initiate a production run) P500 Beginning Inventory of Product Y - 0 - At present, the company produces 2,250 units of Product X per production run, for a total of 15 production runs per year. The company is considering to use the EOQ model to determine the economic lot size and the number of production runs that will minimize the total inventory carrying cost and setup cost for Product Y If the EOQ model is used, what is the economic lot size?
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 6E: Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The...
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31.This is Cost Accounting. Explain briefly and answer.
The following information pertains to Lannister Manufacturing Corporation’s Product Y:
|
Annual Demand |
33,750 units |
|
Annual cost to hold one unit of inventory |
P15 |
|
Setup cost (or the cost to initiate a production run) |
P500 |
|
Beginning Inventory of Product Y |
- 0 - |
At present, the company produces 2,250 units of Product X per production run, for a total of 15 production runs per year. The company is considering to use the EOQ model to determine the economic lot size and the number of production runs that will minimize the total inventory carrying cost and setup cost for Product Y
If the EOQ model is used, what is the economic lot size?
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