Reference no: EM131129091

Ergonomics Inc. sells ergonomically designed office chairs. The company has the following information: Average demand = 26 units per day Average lead time = 52 days Item unit cost = $72 for orders of less than 420 units Item unit cost = $69 for orders of 420 units or more Ordering cost = $47 Inventory carrying cost = 25% The business year is 250 days Assume there is no uncertainty at all about the demand or the lead time. a. Calculate EOQ if unit cost is $72 and $69. (Note: These EOQs do not need to be feasible in their price range.) (Round up your answers to the next whole number.) EOQ Unit cost at $72 units Unit cost at $69 units b. Calculate annual ordering costs for each alternative? (Round your answers to 2 decimal places.) Annual Ordering Cost Unit cost at $72 $ Unit cost at $69 $ c. Calculate annual inventory carrying costs for each alternative? (Round your answers to 2 decimal places.) Annual Inventory Carrying Cost Unit cost at $72 $ Unit cost at $69 $ d. Calculate annual product costs for each alternative? Annual Product Cost Unit cost at $72 $ Unit cost at $69 $ e. What will be the total costs for each alternative? (Round your answers to 2 decimal places.) Total Cost Unit cost at $72 $ Unit cost at $69 $ f. How many chairs should the firm order each time? Order quantity chairs g. How much the firm can save annually by using the order quantity in Part f. instead of the first EOQ shown in Part a? (Round your answer to 2 decimal places.) Amount saved $