Determine the economic order quantity

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Reference no: EM13999509

Question:

An auto parts supplier sells Hardy-brand batteries to car dealers and auto mechanics. The annual demand is approximately 1,200 batteries.

The supplier pays $28 for each battery and estimates that the annual holding cost is 30 percent of the battery's value. It costs approximately $20 to place an order (managerial and clerical costs). The supplier currently orders 100 batteries per month.

Determine the ordering, holding, and total inventory costs for the current order quantity.

Determine the economic order quantity (EOQ).

How many orders will be placed per year using the EOQ?

Determine the ordering, holding, and total inventory costs for the EOQ. How has ordering cost changed? Holding cost? Total inventory cost?

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Reference no: EM13999509

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