Please answer all parts A through F (Comprehensive EOQ calculations) Knutson Products Inc. is...

60.1K

Verified Solution

Question

Finance

imageimage

Please answer all parts A through F

(Comprehensive EOQ calculations) Knutson Products Inc. is involved in the production of airplane parts and has the following inventory, carrying, and storage costs: 1. Orders must be placed in round lots of 100 units. 2. Annual unit usage is 150,000 . (Assume a 50 -week year in your calculations.) 3. The carrying cost is 30 percent of the purchase price. 4. The purchase price is $50 per unit. 5. The ordering cost is $400 per order. 6. The desired safety stock is 5,000 units. (This does not include delivery-time stock.) 7. The delivery time is 4 week. Given the foregoing information: a. Determine the optimal EOQ level. b. How many orders will be placed annually? c. What is the inventory order point? (That is, at what level of inventory should a new order be placed?) d. What is the average inventory level? e. What would happen to the EOQ if annual unit sales doubled (all other unit costs and safety stocks remaining constant)? What is the elasticity of EOQ with respect to sales? (That is, what is the percentage change in EOQ divided by the percentage change in sales?) f. If carrying costs double, what will happen to the EOQ level? (Assume the original sales level of 150,000 units.) What is the elasticity of EOQ with respect to carrying costs? g. If the ordering costs double, what will happen to the level of EOQ ? (Again, assume original levels of sales and carrying costs.) What is the elasticity of EOQ with respect to ordering costs? h. If the selling price doubles, what will happen to EOQ? What is the elasticity of EOQ with respect to selling price? a. What is the optimal economic order quantity (EOQ) level? (Note that orders must be placed in round lots of 100 units.) units (Round up to the nearest hundred.)

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students