The Allianz Company produces a specialty wood furniture product,and has the following information available concerning its inventory items:

Annual demand is 33,000 packages per year.The purchase price per package is $49.
What are the relevant total costs at the economic order quantity?

Question

The Allianz Company produces a specialty wood furniture product,and has the following information available concerning its inventory items:

Annual demand is 33,000 packages per year.The purchase price per package is $49.
What are the relevant total costs at the economic order quantity?

Quizplus · Accepted Answer

Unit carrying costs = ($49 × 0.13)+ $5 = $11.37
EOQ = = 1651.74 units
 11ea8a5a_a013_c064_a19c_19c9b04491c0_TB5540_00_TB5540_00_TB5540_00 Annual relevant carrying costs = (1651.74 / 2)× $11.37 = $9390
Annual relevant ordering costs = (33,000 / 1651.74)× $470 = $9390
Total costs at the economic order quantity = $9390 + $9390 = $18,780

The Allianz Company Produces a Specialty Wood Furniture Product,and Has