What is the economic order quantity for the company

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Reference no: EM13204004

Question

a What is the operating cycle of a business? How does it vary for different types of business? Why is it important for the management to review this cycle?

b Explain why a shareholder would care if a firm accumulates a very large amount of cash. What options are available for a firm to manage cash if it believes it has too much cash?

c ABC Ltd uses a carbon black dye in the production of its tyres. The following information has been provided in respect to the carbon black dye used in production.

Amount required	250 000 kg per year
Working days	365
Purchase price	$10 per kg
Cost of placing each order	$14
Carrying cost	$1.8 per kg per year

i What is the Economic Order Quantity (EOQ) for the company?

ii What is the number of orders per year?

Reference no: EM13204004

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