Short Grass Incorporated is a distributor of golf balls.Martin's Golf Supplies is a local retail outlet which sells golf balls.Martin's purchases the golf balls from Short Grass Incorporated at $0.95 per ball;the golf balls are shipped in cartons of 72.Short Grass Incorporated pays all incoming freight,and Martin's Golf Supplies does not inspect the balls due to Short Grass' reputation for high quality.Annual demand is 162,520 golf balls at a rate of 3591 balls per week.Martin's Golf Supplies earns 12% on its cash investments.The purchase-order lead time is one week.The following cost data are available:

Purchasing at the EOQ recommended level,what are the relevant total costs? (Round costs to the nearest cent and quantities to the nearest whole number.Your answer might be slightly different from the best answer due to rounding. )
A)$1584
B)$2313
C)$1157
D)$3168

Question

Short Grass Incorporated is a distributor of golf balls.Martin's Golf Supplies is a local retail outlet which sells golf balls.Martin's purchases the golf balls from Short Grass Incorporated at $0.95 per ball;the golf balls are shipped in cartons of 72.Short Grass Incorporated pays all incoming freight,and Martin's Golf Supplies does not inspect the balls due to Short Grass' reputation for high quality.Annual demand is 162,520 golf balls at a rate of 3591 balls per week.Martin's Golf Supplies earns 12% on its cash investments.The purchase-order lead time is one week.The following cost data are available:

Purchasing at the EOQ recommended level,what are the relevant total costs? (Round costs to the nearest cent and quantities to the nearest whole number.Your answer might be slightly different from the best answer due to rounding. )

Purchasing at the EOQ recommended level,what are the relevant total costs? (Round costs to the nearest cent and quantities to the nearest whole number.Your answer might be slightly different from the best answer due to rounding. )
A)$1584 
B)$2313 
C)$1157 
D)$3168

Quizplus · Accepted Answer

Annual Demand / 162,520 / 72 = 2257 cartons
Carrying Cost per carton = ($0.95 × 72 × 12%)+ $0.77 = $8.98
EOQ =
 11ea8a5a_a010_8c05_a19c_b761c3c31226_TB5540_00_TB5540_00_TB5540_00 EOQ = 257.6 cartons - round to 258
RTC = + = $2313
 11ea8a5a_a010_b316_a19c_c778aadfb96b_TB5540_00_TB5540_00_TB5540_00 11ea8a5a_a010_b317_a19c_13005eb0ffed_TB5540_00_TB5540_00_TB5540_00 (Your solution might be slightly different based on rounding. )

Short Grass Incorporated Is a Distributor of Golf Balls