Aeon Laketown predicts that 10,000 units of materials will be used during the year. The expected daily usage is 40 units. The expected lead time is 6 days, and there is a safety stock of 300 units. Aeon expects that the cost of materials will be P480 per unit. It anticipates that it will cost P200 to place each order. The annual carrying cost is P1.00 per unit. Required: a. Calculate the order point. b. Calculate the economic order quantity. c. Calculate the total ordering and carrying costs at EOQ point.
Aeon Laketown predicts that 10,000 units of materials will be used during the year. The expected daily usage is 40 units. The expected lead time is 6 days, and there is a safety stock of 300 units. Aeon expects that the cost of materials will be P480 per unit. It anticipates that it will cost P200 to place each order. The annual carrying cost is P1.00 per unit. Required: a. Calculate the order point. b. Calculate the economic order quantity. c. Calculate the total ordering and carrying costs at EOQ point.
Chapter18: The Management Of Accounts Receivable And Inventories
Section: Chapter Questions
Problem 19P
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Aeon Laketown predicts that 10,000 units of materials will be used during
the year. The expected daily usage is 40 units. The expected lead time is 6
days, and there is a safety stock of 300 units. Aeon expects that the cost of
materials will be P480 per unit. It anticipates that it will cost P200 to place
each order. The annual carrying cost is P1.00 per unit.
Required:
a. Calculate the order point.
b. Calculate the economic order quantity.
c. Calculate the total ordering and carrying costs at EOQ point.
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