Purchase Solution

Calculating Economic Order Quantity

Not what you're looking for?

Ask Custom Question

A auto company has been ordering parts of its production process in lots of 10,000 units. Each order ciss the firm $50 to place. Holding cost per unit is $3. the auto company uses 200,000 units every 250 days.

A. Calculate the EOQ
B. What is the difference in inventory costs between the EOQ and the current order company

Purchase this Solution

Solution Summary

Formula and procedure are shown in this solution.

Solution Preview

D=Annual Demand = 200000 units (assume that there are 250 working days in a year)
Ch=Annual Carrying Cost = 3 per unit
Co=Order Cost = $50 per order
Now, EOQ = (2*D*Co/Ch)^0.5 = ...

Purchase this Solution


Free BrainMass Quizzes
Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

Cost Concepts: Analyzing Costs in Managerial Accounting

This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.

Understanding the Accounting Equation

These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.

Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.