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Shields Carries a Part That Is Popular in the Manufacture

question 4

Essay

Shields carries a part that is popular in the manufacture of automatic sprayers. Demand for this part is 4,000 units per year; order costs amount to $30 per order, and holding costs total $1.50 per unit. The company is considering the implementation of an economic order quantity model in an effort to better manage its inventories.
Required:
A. Compute the economic order quantity.
B. Compute total annual inventory costs if Shields follows the EOQ policy.


Definitions:

Shareholder's Right

The entitlements and privileges, such as voting and profit sharing, accorded to individuals or entities owning shares in a corporation.

Dissent

The act of expressing or holding opinions that are at variance with those previously, commonly, or officially expressed.

Unanimous Shareholder Agreement

An agreement among all shareholders that may restrict the powers of the directors to manage or supervise the management of the company.

Purpose

The reason for which something is done or created or for which something exists.

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