Question

Refer to the data in Exercise 20.6.
In Exercise 20.6
Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The cost of placing an order is $30. The cost of holding one unit of inventory for one year is $15.00. Currently, Ottis places 160 orders of 4,000 plastic housing units per year.
Required:
1. Compute the economic order quantity.
2. Compute the ordering, carrying, and total costs for the EOQ.
3. How much money does using the EOQ policy save the company over the policy of purchasing 4,000 plastic housing units per order?


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  • CreatedSeptember 01, 2015
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