QUESTION 1 The cost accounting department has asked you to check their EOQ figures. You have...

Question

Question

Answer 1

Answer #1

Solution:

Unit cost, P	5
Annual demand, D	71,964
Ordering cost, S	120
Holding costs,H	1.25
EOQ	3303
Annual holding cost = (EOQ/2) * H =(3303/2)1.25 = 1651.5 1.25	$2064.375
Annual ordering cost = (D/EOQ)S = (71,964/3303)120 = 21.787 *120	$2614.496
Annual Purchase cost =PD = 5 71,964	$359,820
Annual Inventory cost = Annual holding cost +Annual ordering cost + Annual purchase cost = 2064.375 + 2614.496 +359,820	$364,498.9

Answer 2

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