A local furniture store is examining its inventory policy and considering using an economic order quantity approach
A local furniture store is examining its inventory policy and considering using an economic order quantity (EOQ) approach for a popular table set that they have had difficulty keeping in stock. They have the following information about the set:
Annual demand = 5000 sets
Current order quantity = 75
Carrying cost = $2.00/unit/year
Order cost = $450
Total stocking cost is the cost to the store of holding a good in its inventory. The stocking cost consists of the carrying cost times half the quantity in inventory and the order completion cost times demand divided by the quantity. In its mathematical form the cost is represented by TSC=(Q/2)C + (D/Q)S.
The total annual stocking cost at the EOQ is 46975
What is an EOQ?
Economic Order Quantity, also known as Economic Purchase Quantity, is the order quantity that minimizes the total holding costs and ordering costs in inventory management. It is one of the oldest classical production scheduling models.
Therefore, the correct answer is as given above
learn more about Total stocking cost: brainly.com/question/17587674
#SPJ1
The complete question goes thus:
A local furniture store is examining its inventory policy and considering using an economic order quantity (EOQ) approach for a popular table set that they have had difficulty keeping in stock. They have the following information about the set:
Annual demand = 5000 sets
Current order quantity = 75
Carrying cost = $2.00/unit/year
Order cost = $450
What is the total annual stocking cost at the EOQ?
If your question is not fully disclosed, then try using the search on the site and find other answers on the subject Business.
Find another answers