Redan Manufacturing uses 2,400 switch assemblies per week and then reorders anot

Question

Redan Manufacturing uses 2,400 switch assemblies per week and then reorders another 2,400. The relevant carrying cost per switch assembly is $9.50, and the fixed order cost is $1,200.

Calculate the economic order quantity. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Redan Manufacturing uses 2,400 switch assemblies per week and then reorders another 2,400. The relevant carrying cost per switch assembly is $9.50, and the fixed order cost is $1,200.

Explanation / Answer

Carrying Cost = Average Inventory*Carrying cost per unit

= (2400/2)*9.50

= $11400

Order Cost = No. of orders During the year * Ordering Cost per order

= 52*1200

= $62400

..

Note:-

Assuming there are 52 working weeks during the year

Carrying Cost = Average Inventory*Carrying cost per unit

= (2400/2)*9.50

= $11400

Order Cost = No. of orders During the year * Ordering Cost per order

= 52*1200

= $62400

..

Note:-

Assuming there are 52 working weeks during the year

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