Louise Manufacturing uses 2,200 switch assemblies per week and then reorders ano
ID: 2767620 • Letter: L
Question
Louise Manufacturing uses 2,200 switch assemblies per week and then reorders another 2,200. The relevant carrying cost per switch assembly is $8.50, and the fixed order cost is $1,100.
A. What are the current carrying costs? (Do not round intermediate calculations.) $________
B. What are the order costs? (Do not round intermediate calculations.) $________
C. Calculate the economic order quantity. (Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.)
EOQ = ________
A. What are the current carrying costs? (Do not round intermediate calculations.) $________
B. What are the order costs? (Do not round intermediate calculations.) $________
C. 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
Carrying costs:
= 2,200×$8.50
= $18,700
Order costs:
= 52×$1,100
= $57,200
Economic ordering quantity:
= (2×Annual requirement×buying cost per order÷Carrying cost per unit)^(1÷2)
= (2×2,200×52×$1,100÷$8.50)^(1÷2)
= 5,441.45 units
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