Superior Pallets Ltd. is looking at ways to reduce its inventory costs. Last year with sales...

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Superior Pallets Ltd. is looking at ways to reduce its inventory costs. Last year with sales of $100,000, total inventory costs amounted to $1,600. The company sells their pallets for $200 each. The manager has come to you for advice as he has heard that the company's total inventory costs could be reduced with the implementation of the economic ordering quantity model. The company's inventory cost are as follows: Total ordering cost Material handling cost Warehouse space Insurance $125 per order $2.50 per unit $1.50 per unit $4.00 per unit Required: Calculate the total inventory cost using the EOQ model and advise the manager whether or not it would be beneficial to change to this method of inventory management. (10 marks) Superior Pallets Ltd. is looking at ways to reduce its inventory costs. Last year with sales of $100,000, total inventory costs amounted to $1,600. The company sells their pallets for $200 each. The manager has come to you for advice as he has heard that the company's total inventory costs could be reduced with the implementation of the economic ordering quantity model. The company's inventory cost are as follows: Total ordering cost Material handling cost Warehouse space Insurance $125 per order $2.50 per unit $1.50 per unit $4.00 per unit Required: Calculate the total inventory cost using the EOQ model and advise the manager whether or not it would be beneficial to change to this method of inventory management. (10 marks)