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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