Warehouse Plc purchases and resells television sets. It has a monthly demand of 24,000 units. It...

 

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Warehouse Plc purchases and resells television sets. It has a monthly demand of 24,000 units. It currently orders the television sets in batches of 12,000 and each order incurs a fixed cost of €400. The inventory manager has carried out an analysis and determined that the EOQ for the company should be 8,000 units. If Warehouse Plc implements an EOQ policy with the EOQ set at 8,000 units, what effect will this have on its annual ordering costs? Assume steady even demand throughout the year, lead times of zero, and safety stock of zero. Warehouse Plc purchases and resells television sets. It has a monthly demand of 24,000 units. It currently orders the television sets in batches of 12,000 and each order incurs a fixed cost of €400. The inventory manager has carried out an analysis and determined that the EOQ for the company should be 8,000 units. If Warehouse Plc implements an EOQ policy with the EOQ set at 8,000 units, what effect will this have on its annual ordering costs? Assume steady even demand throughout the year, lead times of zero, and safety stock of zero.

Answer rating: 100% (QA)

To determine the effect of implementing an Economic Order Quantity EOQ policy with an EOQ of 8000 un... View the full answer