Question

Ordering Quantity

Fisk Corporation is trying to improve its inventory control system and has installed an online computer at its retail stores. Fisk anticipates sales of 49,000 units per year, an ordering cost of $8 per order, and carrying costs of $1.60 per unit.

         a.      What is the economic ordering quantity?

         b.      How many orders will be placed during the year?

         c.      What will the average inventory be?

         d.      What is the total cost of ordering and carrying inventory?

Answer 1

2D Co (2.) The economic ordering quan ting, EQO ch D = Annual demand = 49,000 Co = ordering cost = $8 Ch = holding or carrying cost = $1.6 2 x 49000X8 700 EUR = |ex tgox 8 = 1700 units (b) Orders placed = Hoa = 4.990 = [70] (C.) Average inventory = Eoa = 100 = 1350 units. (d) Ordering cost = 70 x 8 = $560 carrying cost = 350X1.6 = $ 560 Total cast = $560 + $560= $1120