Question 28 The cost accounting department has asked you to check their EOQ figures. You have...

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business Operations-Management

Answer 1

Answer #1

Quarterly Demand = 16095

Annual Demand D = 16095*4 = 64380

Set up Cost S = 120

Unit Cost P = 5

Holding Cost = 5*25% = 1.25

EOQ = 3474

Annual Inventory Cost = (EOQ/2)*H = (3474/2)*1.25 = 2171.25

Annual Set up Cost = (D/EOQ)*S = (64380/3474)*120 = 2223.83

Annual Purchase Cost = P*D = 64380*5 = 321900

Total Annual Cost = 2171.25+2223.83+321900 = 326295.08

Answer 2

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