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Question - Soda Corporation is a manufacturer of cooling products. It purchases 14,400 units of a particular component (CK55) each year at a cost of $60 per unit. Soda Corporation requires a 12% annual rate of return on investment. In addition, relevant carrying costs for insurance, material-handling, breakage are $2.40 per unit per year. Relevant costs per purchase order are $144.
Required -
1. Calculate Soda EOQ for CK55.
2. Calculate Soda total ordering and carrying costs using EOQ.
3. Assume that demand is uniform throughout the year and is known with certainty. The purchasing time is half a month. Calculate Soda reorder point for CK55.
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