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Compute the ordering and carrying costs

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Reference no: EM132866343

Timber Company purchase 250,000 units of a deluxe product each year.

The cost of an order is $80; the cost of carrying one unit in inventory for a year is $10. The item cost $80 each. Timber currently current order size is 10,000 deluxe units per order.

-Compute the ordering and carrying costs using the company current policy

-Calculate the order size using EOQ.

-Calculate the ordering and carrying costs using EOQ.

-If Timber is offered a discount of 25 cents per unit to order 10,000 per order should the offer be accepted or should the company place an order using EOQ?

-Explain three traditional reasons for carrying inventory?

Reference no: EM132866343

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