Bidii Enterprises is located at Kariobangi Light Industries area in Nairobi. The company manufactures a product...
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Bidii Enterprises is located at Kariobangi Light Industries area in Nairobi. The company manufactures a product 'comex' which is used in the building industry. The main raw material used in the manufacture of "comex' is material B4 2000. The following information relates to material B4 2000. Annual requirements Ordering costs Annual holding costs Purchase price per unit Safety stock requirement : 144,000 units Sh. 12,500 per order 20% of the purchase price : Sh.500 None Required: (i) The economic order quantity. (ii) The number of orders needed per year (iii) Total cost of ordering and holding material B4 2000 per year. Bidii Enterprises is located at Kariobangi Light Industries area in Nairobi. The company manufactures a product 'comex' which is used in the building industry. The main raw material used in the manufacture of "comex' is material B4 2000. The following information relates to material B4 2000. Annual requirements Ordering costs Annual holding costs Purchase price per unit Safety stock requirement : 144,000 units Sh. 12,500 per order 20% of the purchase price : Sh.500 None Required: (i) The economic order quantity. (ii) The number of orders needed per year (iii) Total cost of ordering and holding material B4 2000 per year.
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SOLUTION I To calculate the economic order quantity EOQ we can use the following formula EOQ sqrt2 A ... View the full answer
Related Book For
Cost management a strategic approach
ISBN: 978-0073526942
5th edition
Authors: Edward J. Blocher, David E. Stout, Gary Cokins
Posted Date:
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