Calculate eoq and total cost

Assignment Help Corporate Finance

Reference no: EM1345340

Speedy Manufacturers wishes to determine the economic order quantity (EOQ) for a critical and expensive inventory item that is used in large amounts at a relatively constant rate throughout the year.

The firm uses 223 200 units of the item annually. Ith has order cost of R150 per order and its carrying costs associated with this item are R20 per unit per year.

The firm plans to hold safety stock of the item equal to 4 days of usage and it estimates that it takes 10 days to receive an order of the item once placed. Assume a 360 day year.

Required:
4.1 Calculate the firm's EOQ for the item inventory described above.
4.2 What is the firm's total cost based upon the EOQ calculated in 4.1.
4.3 How many units of safety stock should the firm hold?
4.4 What is the firm's re-order point for the item on inventory being evaluated.

Reference no: EM1345340

Questions Cloud

Traditional and derivative instruments : What are the differences between traditional and derivative instruments?

Amortization schedules of interest expense : Spencer Corporation sells 10% bonds having a maturity value of $3,000,000 for $2,783,724. The bonds are dated January 1, 2012, and mature January 1, 2017. Interest is payable yearly on January 1.

Effects of international portfolio diversification : Examine the effects of international portfolio diversification on the investment portfolio. Analyze alternative investment vehicles.

What is the equivalent spring constant k of bone : A man of mass 65 kg falls stiff-legged straight down from a height of 2m. He lands on one foot. The femur is a bone in the leg with the length L=.65m, and a cross-sectional area of about 2.0 x 10^-4m^2. The Young's modulus for bone is 9.4x 10^9 N/..

Calculate eoq and total cost : Speedy Manufacturers wishes to estimate the economic order quantity for a critical and expensive inventory item that is used in large values at a relatively constant rate throughout year.

Treaty of versailles : Reparations payments by Germany required under Treaty of Versailles posed the problem. How were tax payments by German citizens to their government in German marks to be converted to dollar payments to United States lenders?

What is a car acceleration : How fast should a car move toward you for the car's horn to sound 2.88% higher in frequency than as the car is stationary? The speed of sound is 343 m/s.

Decision to present one marketing message : Why doesn't Evo need to tailor its marketing to different countries and do you agree with their decision to present one marketing message

Contribution margin and breakeven analysis : Develop the Contribution Margin and Breakeven Analysis on a spreadsheet for the below company

User Account

All Pages