Calculate the eoq for morgan to produce the components

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Reference no: EM132262190

Morgan Tool and Die presently produces a component for a mining equipment company. The mining company orders there of these components 10 time per year (30 total) and pays $1250 for each component. The inventory cost of the mining company to hold the component is 20% of the cost per component. The inventory cost for Morgan is also 20%. The setup cost for Morgan to produce the components is $150. Calculate the EOQ for Morgan to produce the components and the discount that could be offered if the parts made in EOQ quantities, with one-half the saving passed on to the mining company.

Reference no: EM132262190

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