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The Stem Grocery orders most of its items in lot sizes of 10 units. The...

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Accounting

The Stem Grocery orders most of its items in lot sizes of 10 units. The average annual demand per side of beef is 720 units per year. Ordering costs are $25 per order with an average purchasing price of $100. Annual inventory carrying costs are estimated to be 40% of the unit cost.

Required:

  1. Determine the economic order quantity.
  2. Determine the economic order quantity if the carrying costs are 50% of unit cost.
  3. Determine the total ordering costs under both a and b

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