Ralph was in the process of completing the quarterly planning for the purchasing department when a major computer malfunction lost most of his data. For direct material XXX he was able to recover the following:
Average inventory level of XXX | 200 |
Orders per year | 40 |
Average daily demand | 48 |
Working days per year | 250 |
Annual ordering costs | $4,000 |
Annual carrying costs | $6,000 |
Ralph purchases at the EOQ quantity level.
Required:
Determine the annual demand, the cost of placing an order, the annual carrying cost of one unit, and the economic order quantity.