A service garage uses 120 boxes of cleaning cloths a year. The boxes cost $6 each. Ordering cost is $3 and holding cost is 10 percent of purchase cost per unit on an annual basis.
Determine:
(A) the economic order quantity
(B) the total cost of carrying the cloths (excluding purchase price)
(C) the average inventory
D = 120 boxes per year
S = $3
H = .10($6) = $.60 per box-year

Question

Quizplus · Accepted Answer

The Answer of A service garage uses 120 boxes of cleaning cloths a year. The boxes cost $6 each. Ordering cost is $3 and holding cost is 10 percent of purchase cost per unit on an annual basis.
Determine:
(A) the economic order quantity
(B) the total cost of carrying the cloths (excluding purchase price)
(C) the average inventory
D = 120 boxes per year
S = $3
H = .10($6) = $.60 per box-year

A Service Garage Uses 120 Boxes of Cleaning Cloths a Year