You are managing a company that stocks and distributes hardware. The company employs two purchasing agents who receive combined salaries of $90,000. They process six thousand purchase requests per year. Average inventory in storage is $600,000, and the total cost of running the warehouse is $200,000. You are told that the company purchases five thousand hammers per year at a cost of $5.34 per hammer.
a. Using the EOQ formula, how many hammers should be ordered at one time?
b. If the hammer vendor stated that it would charge $5.00 per hammer if you ordered two hundred or more at a time, what would you do?

  • CreatedJuly 31, 2015
  • Files Included
Post your question