Deluxe Jewelry Corporation produces quality jewelry items for various retailers.For the coming year,it has estimated it will consume 500 ounces of gold.Its carrying costs for a year are $2 per ounce.No safety stock is maintained.If the EOQ is 100 ounces,what would be the estimate for Deluxe Jewelry' total carrying costs for the coming year?

Question

Quizplus · Accepted Answer

The total carrying cost is calculated as the EOQ (Economic Order Quantity) divided by 2, multiplied by the carrying cost per unit. Given EOQ is 100 ounces and carrying cost is $2 per ounce, the total carrying cost = (100/2) * $2 = $100.

Deluxe Jewelry Corporation Produces Quality Jewelry Items for Various Retailers