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Calculate the annual relevant ordering cost for the eoq

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Question - Dransfield Company sells electronic components. The store uses the Economic Order Quantity model (EOQ) to make inventory decisions. For the upcoming year, the company is trying to determine the EOQ for component A51. Each unit can be purchased for $300.

- Expected annual demand - 10,000 units

- Ordering cost per purchase order - $40

- Carrying cost - the company has required rate of return is 25% plus $5 of insurance costs.

Required -

1. Calculate the EOQ.

2. Calculate the annual relevant ordering cost for the EOQ calculated in requirement 1.

3. Calculate the annual relevant carrying costs for the EOQ calculated in requirement 1.

Reference no: EM133152164

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