Question: Problem Your company is concerned that too much working capital is tied up in inventory, but at the same time are concerned stockouts. While many
Problem Your company is concerned that too much working capital is tied up in inventory, but at the same time are concerned stockouts. While many companies reorder inventory items based on the number of units they think they will need, a more costeffective method to determine the optimal order quantity is accomplished by calculating the economic order quantity EOQ The costs to be considered are holding costs consisting of storage facility costs and related labor costs; and order costs which consist of shipping and handling costs. Onehalf of the inventory is on hand at any point in time, and demand is relative even across time. The company's inventory data and assumed possible order quantities are presented here.Include a chart legend, appropriate chart title, axes labels, and properly formatted amounts on the axes.
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