EOQ analysis to confirm the optimum order amount

Assignment Help Financial Management

Reference no: EM131939903

You project to order 100,000 widgets to sell this year. You do an EOQ analysis to confirm the optimum order amount. It shows that figure to be 2,000 per order. You then use this information to show that the total inventory cost at this level of ordering will be $6,000 per year. The purchasing person has been in the job for 30 years and has their own method of ordering, and prefer to order only 1,000 widgets at a time, which you then calculate would yield an inventory cost of $7,500. Explain to this person in your own words why the orders should be for 2,000 widgets.

Reference no: EM131939903

Questions Cloud

Compute what is the effective yield to maturity : Assume a zero-coupon bond that sells for 5444 will mature in 10 years at $1, 150. Use Appendix B for an approximate answer but calculate your final answer.

Which alternative should you take and why : Assume that you just won the state lottery. Your prize can be taken either in the form of $35,000 a year received at the end of the next 25 years.

What is the price today of a two-year : What is the price today of a two-year, default-free security with a face value of $1,000 and an annual coupon rate of 7%? The price is $.

Calculate what is the cost of capital : Assuming this is the first year that a project's cash flows are growing at a constant rate, what is the cost of capital if annual cash flows are currently.

EOQ analysis to confirm the optimum order amount : You project to order 100,000 widgets to sell this year. You do an EOQ analysis to confirm the optimum order amount.

What is the effective financing rate for a firm : Assume the U.S. interest rate is .075, the New Zealand interest rate is 0.055, the spot rate of the NZ$ is $0.58, and the one-year forward rate of the NZ$.

In one-period binomial tree option pricing model : In a one-period binomial tree option pricing model, The theoretical price of a European put option with a strike price of 36 will:

What price will eliminate triangular arbitrage : Assume you are a trader with Deutsche Bank. From the quote screen on your computer terminal, you notice that Dresdner Bank is quoting €0.855/$1.00.

All assets would plot on security market line : In a perfectly efficient market, all assets would plot on the Security Market Line.

User Account

All Pages