Bishop Manufacturing Is Implementing an Economic Order Quality (EOQ) Inventory

question 66

Essay

Bishop Manufacturing is implementing an economic order quality (EOQ) inventory control system and needs a good estimate of the cost to process a purchase order (PO). It takes 5 total labor hours to process a PO. The average number of SKUs on a PO is 2.2. The average wage for people working in the purchasing department is $22 per hour plus employee benefits of $3 per hour. Fixed costs for the purchasing department are $250,000 per year assuming a 2,000 hour per employee per year work week. Given this information, what is a good estimate of the cost to process one purchase order?

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Definitions:

Accountants

Accountants are professionals responsible for managing and reviewing financial information, ensuring accuracy, and compliance with laws and regulations, often aiding in financial planning and decision-making.

Business Ethicists

Scholars or professionals who study and advise on ethical practices and moral dilemmas in business environments.

Moderation

The act of avoiding extremes or excesses, especially in behavior or expression; seeking a balanced approach.

Pragmatism

A philosophical approach that assesses theories or beliefs in terms of their practical application and effectiveness, emphasizing action and results over abstract principles.