Question

Fisk Corporation is trying to improve its inventory control system and has installed an online computer at its retail stores. Fisk anticipates sales of 58,800 units per year, an ordering cost of $4 per order, and carrying costs of $1.50 per unit. a.What is the economic ordering quantity? b.How many orders will be placed during the year? c.What will the average inventory be? d.What is the total cost of ordering and carrying inventory?

Answer 1

Answer:

Please consider the following explanation

Explanation:

a.   EOQ = 560 units

b.  58800 units/560 units = 105 orders

c. EOQ/2 = 560/2 = 280 units (average inventory)

d.  105 orders × $4 ordering cost = $ 420

280 units × $1.50 carrying cost per unit =  420

Total costs = $840