Peckford Ltd.purchases 900,000 units of its product every year.The ordering costs are $125 per order and the annual carrying cost of one unit is $1.50.Under its current inventory policy, it purchases the units 60 times during the year, in batches of 15,000 units per order.Required:
a.Calculate the EOQ for Peckford Ltd.
b.By ordering at the EOQ, how much in inventory costs will Peckford Ltd.save per year?

Question

Quizplus · Accepted Answer

The Answer of Peckford Ltd.purchases 900,000 units of its product every year.The ordering costs are $125 per order and the annual carrying cost of one unit is $1.50.Under its current inventory policy, it purchases the units 60 times during the year, in batches of 15,000 units per order.Required:
a.Calculate the EOQ for Peckford Ltd.
b.By ordering at the EOQ, how much in inventory costs will Peckford Ltd.save per year?