Reference no: EM132804748

The Spiffy Muffler Company Car Dealer has to decide how many mufflers to order for repairing a certain brand of automobile. This particular muffler has a demand of six units per month and costs $30 each. The carrying charge is 20% per year, and the ordering cost is $18 per order.

Using this data, answer the three questions below.

1. What is the EOQ for this item?

2. How often will the dealer reorder this part?

3. What are the annual ordering costs? What are the annual carrying costs? Show your work for all computations, which must be typed. You can use whatever symbol you want to represent the square root, as long as you make it clear what that symbol is (such as an asterisk or a forward slash).

If you complete it in Excel, you can include any narrative answers asked for right in an Excel cell, or attach them in a Word document.

Additional help in completing this problem is available in the Inventory Module in Content.

If the problem asks for carrying costs and ordering costs, see attachments. Total costs are the sum of the carrying and ordering costs.

If the problem gives you weekly or monthly data don't forget to convert to an annual basis (x52 if weekly, x12 if monthly).

All formulas for this problem are contained in the text chapter and the week's Content Module Notes, and the total cost formula is found on the attached file(s).