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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?
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