Purchase Solution

EOQ cost of ordering and carrying inventory

Not what you're looking for?

Ask Custom Question

A company expects to order 126K memory chips for inventory during the coming year and it will use this inventory at a constant rate. Fixed ordering costs are $200 per-order; the purchase price per chip is $25 and the firm's inventory carrying cost is equal to 20% of the purchase price (Assume 360 day year)

At the EOQ what is the cost of ordering and carrying inventory:

23, 820
7,940
15,940
34,220
47,693

Purchase this Solution
Solution Summary

This explains the steps to compute the EOQ cost of ordering and carrying inventory.

Purchase this Solution
Free BrainMass Quizzes
Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.

Operations Management

This quiz tests a student's knowledge about Operations Management

Organizational Leadership Quiz

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

Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

Change and Resistance within Organizations

This quiz intended to help students understand change and resistance in organizations

View More Free Quizzes
Related BrainMass Solutions

  • Economic Order Quantity

    As annual demand and inventory carrying cost per unit are given for the same time period, the given information can be used directly to compute EOQ EOQ = Square root of (2*Quarterly demand*Ordering cost/Quarterly inventory carrying per unit cost EOQ

  • Inventory Management - Ordering and Inventory

    of orders = Annual usage/EOQ = 1137/102 = 11.14 or 12 orders Ordering cost = number of orders*per order cost = 12*$100 = $1200 Annual cost = ordering cost + carrying cost = 1200 + 1122 = $2322 New ordering cost, S = $87.5 and new carrying cost

  • Inventory management

    ) = 5619.52 ~ 5620 units Average inventory = EOQ/2 = 5620/2 = 2810 units Carrying cost = average inventory*inventory carrying cost = 2810*$0.095 = $266.95 Number of orders = Annual usage/EOQ = 15,000/5620 = 2.669 or 3 orders Ordering cost = number

  • EOQ Computation for Salesworthy Sprokets Company

    annual inventory ordering and carrying cost for the year?

  • EOQ Model

    Average inventory=EOQ/2=55/2=27.5 units Annual carrying costs=Average inventory*carrying cost(H)=27.5*25=$687.5 Number of orders? Annual ordering cost?

  • Present Total Annual Stocking Costs

    Number of orders = Annual demand / order quantity Average inventory = Order quantity / 2 Total annual stocking cost = Ordering cost + Inventory carrying cost Ordering cost = number of orders x ordering cost Inventory carrying cost = Carrying cost

  • Economic Order Quantity: Minimizing Ordering and Inventory Costs

    Given: Demand or Annual inventory requirement = 400,000 units Ordering cost = $28 Production cost per unit = $48 Carrying cost = 15% of the cost of the unit = 15% of $48 = .15* $48 = $7.20 The basic EOQ: EOQ = ?

  • EOQ and relevant total costs

    of orders per year = Annual demand/EOQ = 4160/188 = 22.12 ~ 23 orders per year Ordering cost = Number of orders * Ordering cost = 23*$94.5 = $2173.5 Total relevant cost = $2091.5 + $2173.5 = $4265 Note: Difference between inventory carrying cost

  • Economic Order Quantity and Inventory Control System

    What will the average inventory be? What is the total cost of ordering and carrying inventory? What is the economic ordering quantity?

View More Related Solutions