Compute the optimal order quantity using the eoq model

Assignment Help Accounting Basics

Reference no: EM13764477

Effect of management evaluation criteria on EOQ model. Computers 4 U purchases one model of computer at a wholesale cost of $200 per unit and resells it to end consumers. The annual demand for the company's product is 500,000 units. Ordering costs are $800 per order and carrying costs are $50 per computer, including $20 in the opportunity cost of holding inventory.

Required:

1. Compute the optimal order quantity using the EOQ model.

2. Compute a) the number of orders per year and b) the annual relevant total cost of ordering and carrying inventory.

3. Assume that when evaluating the manager, the company excludes the opportunity cost of carrying inventory. If the manager makes the EOQ decision excluding the opportunity cost of carrying inventory, the relevant carrying cost would be $30 not $50. How would this affect the EOQ amount and the actual annual relevant cost of ordering and carrying inventory?

Reference no: EM13764477

Questions Cloud

The national aeronautics and space administration issue : Discuss the mission(s) and research that the National Aeronautics and Space Administration (NASA) has made to this planet.

Criminal fraud versus civil fraud and taxation : Imagine a situation in which a client under audit by the IRS omitted $100,000 in income. From the e-Activity, examine the major factors relative to the omission by the client that would result in a criminal investigation, rather than a civil fraud..

Explain the decrease in criminal activity for young people : Your individual work assignment is to research and explain the decrease in criminal activity for young people after they pass through a period of adolescence

Sustainable approach to waste reduction developed : Analyze the sustainable approach to waste reduction developed - Previous methods of production

Compute the optimal order quantity using the eoq model : Compute the optimal order quantity using the EOQ model. Compute a) the number of orders per year and b) the annual relevant total cost of ordering and carrying inventory.

Create a class called bank account : Create a class called BankAccount. The BankAccount class should contain a String to store the customer name and a double to store the account balance. The BankAccount class should have two constructors, as follows:

Problem related to the contractual remedies : Haply Inc. contracts with Barksdale LLC to have an engine repaired. After much negotiation, the parties agree that the pump will be repaired and reinstalled at Haply's facilities in 5 days. Haply plans on losing $40,000 a day for each day the engi..

Water quality and contamination : Discuss the value of statistical significance vs. pragmatic usefulness.

Database development : Recommend at least three (3) specific tasks that could be performed to improve the quality of datasets, using the Software Development Life Cycle (SDLC) methodology. Include a thorough description of each activity per each phase.

User Account

All Pages