An accountant of a firm has collated the following inventory data pertaining to a fragile...
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Accounting
An accountant of a firm has collated the following inventory data pertaining to a fragile item that costs $50 managed at her firm's warehouse.
Type of cost | Values |
Opportunity cost of investment in inventory | 8.5% |
Fixed cost of order generation per order | $35 |
Cost of inspecting items received | $5 |
Cost due to breakage or spoilage | 6.5% |
Warehouse rental | 3% |
Insurance costs | 1% |
If the annual demand for the item is 2400, compute the;
(a) EOQ
(b) Annual ordering cost
(c) Annual holding cost
(d) TRC
(e) Cycle time between each orders
(f) Number of orders in a year
for this item. ( Note: Assume 365 workdays per year)
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