Technology Corporation expects to order 126,000 memory chips for inventory during the coming year, and it...

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Technology Corporation expects to order 126,000 memory chips forinventory during the coming year, and it will use this inventory ata constant rate. Fixed ordering costs are $200 per order; thepurchase price per chip is $25; and the firm’s inventory carryingcosts is equal to 20 percent of the purchase price. (Assume a360-day year.) What is the economic ordering quantity for chips?Enter your answer rounded to two decimal places. For example, ifyour answer is 12.345 then enter as 12.35 in the answer box.

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Solution Economic order quantity is calculated using the following formula 2AO C Where A Annual usage units O Ordering cost per unit C Annual carrying See Answer

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Technology Corporation expects to order 126,000 memory chips forinventory during the coming year, and it will use this inventory ata constant rate. Fixed ordering costs are $200 per order; thepurchase price per chip is $25; and the firm’s inventory carryingcosts is equal to 20 percent of the purchase price. (Assume a360-day year.) What is the economic ordering quantity for chips?Enter your answer rounded to two decimal places. For example, ifyour answer is 12.345 then enter as 12.35 in the answer box.