A Company Uses 1,500 Per Year of a Certain Subassembly

question 96

Essay

A company uses 1,500 per year of a certain subassembly that has an annual holding cost of $45 per unit.Each order placed costs $150.The company operates 300 days per year and it has found that an order must be placed with the supplier 6 working days before it can expect to receive that order.For this subassembly, find:
(a)the economic order quantity.
(b)the annual holding cost.
(c)the annual ordering cost.
(d)the reorder point.

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Definitions:

Form I-9

A document used in the United States for verifying the identity and employment authorization of individuals hired for employment.

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Regularly scheduled gatherings where employees and management discuss progress, share information, and coordinate activities within an organization.

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A fixed amount of wages paid to an employee on a regular basis for a prescribed period of time, for example, weekly or monthly.