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What is economic order quantity for robinson manufacturing

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Reference no: EM132944229

The mechanical engineer at Robinson Manufacturing has developed a new gearbox. The local distributor expects to increase his sales by 30% over the past year due to this new development. Last year's sales were $70,000 at a selling price of $100 per unit. The manager would like to cut costs as much as possible and comes to you for advice.

Relevant cost information includes:

Warehouse space$3.00/unit
Material handling expense$2.00/unit
insurance premium$1.00/unit
Total ordering cost$150.00/per order

Problem 1: What is the economic order quantity?

Option 1: 213 units

Option 2: 187 units

Option 3: 174 units

Option 4: 522 units

Reference no: EM132944229

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