The John Equipment Company estimates its carrying cost at 15% and its ordering cost at $9 per order. The estimated annual requirement is 48,000 units at a price of $4 per unit. Required: What is the most economical number of units to order? How many orders should be placed in a year? cost at 15% and its ordering cost at $9 per order. The estimated annual requirement is 48,000 units at a price of $4 per unit.

Required:

">

The John Equipment Company estimates its carrying cost at 15% and its ordering cost at $9 per order. The estimated annual requirement is 48,000 units at a price of $4 per unit. Required: What is the most economical number of units to order? How many orders should be placed in a year?

The John Equipment Company estimates its carrying cost at 15% and its ordering cost at $9 per order. The estimated annual requirement is 48,000 units at a price of $4 per unit.

Required:

  • What is the most economical number of units to order?
  • How many orders should be placed in a year?
  • How often should an order be placed?

Solution

1. What is the most economical number of units to order?

Annual requirement = 48,000 units

Ordering cost = $9 per order

Carrying cost = 15% of per-unit cost

Order a similar paper

Get the results you need


Consult a tutor