A) Clap Off Manufacturing uses 2,300 switch assemblies per week and then reorder
ID: 2750996 • Letter: A
Question
A) Clap Off Manufacturing uses 2,300 switch assemblies per week and then reorders another 2,300. Assume the relevant carrying cost per switch assembly is $6.00 and the fixed order cost is $570. Required: (a) Calculate the carrying costs. (Do not include the dollar sign ($).)
B) Calculate the restocking costs
Calculate the economic order quantity. (Round your answer to 2 decimal places)
Calculate the EOQ number of orders per year. (Round your answer to 2 decimal places (e.g., 32.16).)
Calculate the economic order quantity. (Round your answer to 2 decimal places)
Calculate the EOQ number of orders per year. (Round your answer to 2 decimal places (e.g., 32.16).)
Explanation / Answer
Carrying costs:
= 2,300×$6×0.5
= $6,900
Restocking costs:
= $570×52
= $29,640
Economic ordering quantity:
= (2×Annual requirement×buying cost per order÷Carrying cost per unit)^(1÷2)
= (2×2,300×52×$570÷$6)^(1÷2)
= 4,766.97 units
EOQ number of order per year:
= 2,300 units×52÷4,766.97 units
= 25.09 orders
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