The Trektronics store begins each week with 320 phasers in stock. This stock is
ID: 2472414 • Letter: T
Question
The Trektronics store begins each week with 320 phasers in stock. This stock is depleted each week and reordered. The carrying cost per phaser is $27 per year and the fixed order cost is $63.
What is the economic order quantity? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
The Trektronics store begins each week with 320 phasers in stock. This stock is depleted each week and reordered. The carrying cost per phaser is $27 per year and the fixed order cost is $63.
Explanation / Answer
Carrying costs
=Aveerage invenory*Cost of carrying each unit
= (320/2)($27) = $14,320
Restocking costs=the number of orders *the cost of an order
52 weeks($63) = $3,276
The economic order quantity is:
EOQ = [(2T × F)/CC]1/2
EOQ = [{2(52)(320)*($63)}/27]1/2
EOQ = 278.66
As per above calculation ,It should decrease order quantity.
The number of orders per year will be the total units sold per year divided by the EOQ, so:
Number of orders per year = 52*320/278.66
=59.71
T=Total unit sold per year
Number of orders per year = 88.52
The economic order quantity is:
EOQ = [(2T × F)/CC]1/2
EOQ = [{2(52)(320)*($63)}/27]1/2
EOQ = 278.66
As per above calculation ,It should decrease order quantity.
The number of orders per year will be the total units sold per year divided by the EOQ, so:
Number of orders per year = 52*320/278.66
=59.71
T=Total unit sold per year
Number of orders per year = 88.52
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