70.2K

Verified Solution

Link Copied!

Tracer Bicycles (Tracer) sources some local and some imported bicycle parts and has an assembly plant in Sydney. Tracer uses the Economic Order Quantity (EOQ) method to determine the quantity tyres to order.

They have budgeted their annual usage requirements of standard 27-inch mountain bike tyres at 12,000 units, they had order costs of $640 per order and a carrying cost per unit of $4.00, a 2-month lead time from ordering to delivery and a safety stock requirement of 500 units.

Tracer Bicycles (Tracer) sources some local and some imported bicycle parts and has an assembly plant in Sydney. Tracer uses the Economic Order Quantity (EOQ) method to determine the quantity tyres to order.

They have budgeted their annual usage requirements of standard 27-inch mountain bike tyres at 12,000 units, they had order costs of $640 per order and a carrying cost per unit of $4.00, a 2-month lead time from ordering to delivery and a safety stock requirement of 500 units.

Tracer Bicycles (Tracer) sources some local and some imported bicycle parts and has an assembly plant in Sydney. Tracer uses the Economic Order Quantity (EOQ) method to determine the quantity tyres to order.

They have budgeted their annual usage requirements of standard 27-inch mountain bike tyres at 12,000 units, they had order costs of $640 per order and a carrying cost per unit of $4.00, a 2-month lead time from ordering to delivery and a safety stock requirement of 500 units.

required

1. Using the EOQ method, what is the EOQ order size for Tracer when ordering these tyres? (All answers have been rounded UP to the next WHOLE 100 units)

2. Using the budgeted amounts given, what would be the Reorder Point (ROP stock level) at which Tracer should order more of these tyres? (All answers have been rounded UP to the next WHOLE 10 units.)

Answer & Explanation Solved by verified expert

See Answer