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Calculate total cost of holding and total cost of ordering

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Reference no: EM133008476

QUESTION - The following information for the production of a machine component Z is provided.

Amount (R)

Annual requirement of component Z 50 000

Price per unit 0.12

Holding costs per unit per year 0.02

Ordering costs per order 6

Required -

1. Calculate EOQ for component Z?

2. Calculate the total cost of holding and the total cost of ordering.

3. State and explain why organizations maintain raw material inventory.

Reference no: EM133008476

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