Louise Manufacturing uses 2,300 switch assemblies per week and then reorders ano

Question

Louise Manufacturing uses 2,300 switch assemblies per week and then reorders another 2,300. The relevant carrying cost per switch assembly is $9.00, and the fixed order cost is $1,150. What are the current carrying costs? (Do not round intermediate calculations.) Carrying costs $ What are the order costs? (Do not round intermediate calculations.) Order costs $ Calculate the economic order quantity. (Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.) EOQ

Explanation / Answer

Current Carrying Cost = ((2300 / 2) * 9) = $10350

The order Costs are = (((2300 * 52) / 2300) * 1150) = $59, 800

Economic Order Quantity = Sqrt (( 2 * Annual Demand * set up Cost) / (Holding Cost))

                                              = sqrt((2 * 2300 * 52 * 1150) / 9) = 5528.512 switches

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