Using the Data Below, Find the Economic Order Quantity (EOQ)

question 55

Essay

Using the data below, find the economic order quantity (EOQ), the total annual cost associated with the economic order quantity, and the reorder point.
$\begin{array}{|l|l|}\hline\text { Annual Demand: } & 8,000 \text { units } \\\hline \text { Weeks Operating: } & 52 / \text { year } \\\hline \text { Ordering Cost: } & \$ 35 / \text { order } \\\hline \text { Holding Cost: } & \$ 4 / \text { unit/year } \\\hline \text { Lead Time: } & 3 \text { weeks }\\\hline\end{array}$

---

Definitions:

Accounting Principles

The rules and guidelines that companies must follow when reporting financial data, ensuring consistency, reliability, and comparability of financial statements.

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB) that is used globally.

GAAP

Generally Accepted Accounting Principles; a framework of accounting standards, rules and procedures used in the compilation of financial statements in the U.S.

Treasury Stock Transaction

Refers to the buying back or reacquisition of previously sold shares by the issuing company, reducing the amount of outstanding stock on the open market.