John, Stuart, Mills Company uses 10,000 units of material X per year. The material costs $100 per unit. The cost of placing an order is $160 and the cost of carrying a unit in inventory for a year is $20.
Required: (1) Prepare a tabular analysis to find the economic order quantity using the table format below.

(2) Find the EOQ using the formula approach.
(3) What might cause the answers as to the optimal order to quantity to differ between 1 and 2?

Question

John, Stuart, Mills Company uses 10,000 units of material X per year. The material costs $100 per unit. The cost of placing an order is $160 and the cost of carrying a unit in inventory for a year is $20.
Required: (1) Prepare a tabular analysis to find the economic order quantity using the table format below.
 
(2) Find the EOQ using the formula approach.
(3) What might cause the answers as to the optimal order to quantity to differ between 1 and 2?

Quizplus · Accepted Answer

The Answer of John, Stuart, Mills Company uses 10,000 units of material X per year. The material costs $100 per unit. The cost of placing an order is $160 and the cost of carrying a unit in inventory for a year is $20.
Required: (1) Prepare a tabular analysis to find the economic order quantity using the table format below.
 
(2) Find the EOQ using the formula approach.
(3) What might cause the answers as to the optimal order to quantity to differ between 1 and 2?

John, Stuart, Mills Company Uses 10,000 Units of Material X