A client has created a budget based on their customer, Lou's Luggage. They want a report that shows actuals versus budget for th
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Answer:
a.
EOQ = 2,944 units
b.
Setup cost = Numbers of Order x Ordering cost = $8.83
Holding Cost = $8.83
Explanation:
a.
Economic order quantity is the quantity at which business incur minimum cost. This is the level of order where the holding cost equals to the ordering cost of the business.
As per given data
Annual Demand = 50 per week x 52 weeks in a year = 2,600 bolts
Ordering cost = $10
Carrying cost = $0.03 x 20% = $0.006
EOQ =
EOQ =
EOQ = 2,943.92 = 2,944 units
b.
Setup cost = Numbers of Order x Ordering cost = (2,600 / 2,944) x $10 = $8.83
Holding Cost = (2,944 / 2) x $0.006 = $8.83