Determine the economic order quantity for the new product

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Reference no: EM131845760

Kim Clark has asked you to help him determine the best ordering policy for a new product The demand for the new product has been forecasted to be about 1.000 units annually To help you get a handle on the carrying and ordering costs. Kim has given you the list of last year's costs He thought that these costs might be appropriate for the new product.

Cost Factor

Cost (S)

Cost Factor

Cost (S)

Taxes for the warehouse

1.900

Warehouse supplies

320

Recebing and incoming inspection

1.450

Research and development

2.750

New product development

2.500

Purchasing salaries & wages

30.000

Acct. dept costs to pay invoices

500

Warehouse salaries & wages

12.600

inventory insurance

600

Pilferage of inventory

800

Product advertising

800

Purchase older supplies

500

Spoilage

750

Inventory obsolescence

300

Sending purchasing orders

750

Purchasing dept. overhead

1.000

He also told you that these data were compiled for 10.000 inventory items that were carried or held during the year.

You have also determined that 200 orders were placed last year.

Your job as a new operations management graduate is to help Kim determine the economic order quantity for the new product.

EOQ = units (round your response for the nearest whole number).

Reference no: EM131845760

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