A company is attempting to determine the economic order quantity for glass used in the production...
A company is attempting to determine the economic order quantity for glass used in the production of windows. 3,000 ponds of glass were used at a constant rate last period. Each order represents an ordering cost of $50. Carrying costs are $30 per pond over the 100-day planning period.
A-What is the economic order quantity?
B- The company has determined that it takes only 5 days to receive the order of glass after the placement of the order. When should the company order more glass?
Homework Answers
A. EOQ =(2*100 day Demand*Ordering Cost/Carrying Cost)^0.5
=(2*3000*50/30)^0.5 =100
B, The level of reordering point =Average Daily Sales *Lead Time
=(3000/100)*5 =150
When stock is 150 company should order more glass
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A company is attempting to determine the economic order quantity
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