A. Mubarak Corporation is a company that involved in producing and selling of clock radios. Component C15

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Question:

A. Mubarak Corporation is a company that involved in producing and selling of clock radios. Component C15 is the main component used to manufacture clock radio. Currently, the component is bought from a supplier in Johor Bharu at RM 25 per unit. The company is concerned about the stock level of the component, and is considering a stock management system based on the economic order quantity (EOQ) model.

After a detailed study, the company has estimated its holding cost is at 10% of the purchase price. The component is ordered at RM200 per order and the supplier charges the company RM146 per delivery. The purchasing manager confirmed that the average demand for the product is 1,000 units per week and there are 52 weeks in a year.

Required:

i. Calculate the economic order quantity of the component.

ii. Determine the number of order that has to be placed in a year.