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Determine the total order and carrying cost based on EOQ

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Micro Corp. uses 1,000 units of Chip annually in its production. Order costs consist of $10 for placing a long-distance call to make the order and $40 for delivering the order by truck to the company warehouse. Each Chip costs $100, and the carrying costs are estimated at 15.625% of the inventory cost.

Required:

Question 1: Compute the economic order quantity.

Question 2: Determine the total order and carrying cost based on EOQ.

Question 3: Determine the best order quantity if Chip is purchased only in multiples of 25 units. (Round answers to the nearest whole dollar in case of calculating order and carrying cost in proving the best order size.)

Reference no: EM132622959

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