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What happens to eoq if the carrying cost rises and explain

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Reference no: EM132515654

Consider the following inventory information and relationships for the F. M. Beaner Corporation:

  1. Orders can be placed only in multiples of 100 units.
  2. Annual unit usage is 300,000.
  3. The carrying cost is 30% of the purchase price of the goods.
  4. The purchase price is $10 per unit.
  5. The ordering cost is $50 per order.
  6. The desired safety stock is 1000 units. (This does not include delivery- time stock.)
  7. Delivery time is 2 weeks.

Question 1: What is the optimal EOQ level?

Question 2: How many orders will be placed annually?

Question 3: At what inventory level should a reorder be made?

Question 4: What is the total cost of EOQ based system? Don't forget Safety stock.

Question 5: What happens to EOQ if the carrying cost rises? Explain.

Reference no: EM132515654

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