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

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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 a good estimate of the cost to process one purchase order is


Definitions:

U.S. Dollar

The United States' official monetary unit, extensively utilized as a benchmark for trade in global markets.

Exchange Rate

The price of one currency in terms of another currency for conversion purposes.

Brazilian Real

The official currency of Brazil, abbreviated as BRL, and made up of 100 centavos.

U.S. Dollar

The currency of the United States, widely used globally as a standard of exchange and a reserve currency.

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