1. A medical device company sells branded power tools to the hospitals. The annual demand is approximately 1,800 batteries. The cost price per power tool is $250 for an estimated annual holding cost is 35% of the product’s value. It costs approximately $180 to place an order (ordering cost). The company currently orders 150 power tools per month (considering LT as 30 days).

a. Determine the ordering, holding, and total inventory costs for the current order quantity.

b. Determine the economic order quantity (EOQ).

c. How many orders should be placed per year using the EOQ?

d. Determine the ordering, holding, and total inventory costs for the EOQ. (20 Marks)

Answer rating: 100% (QA)

Economic Order Quantity EOQ Economic Order Quantity is that Quantity of Inventory which management s... View the full answer