Evans company has the following informationannual demand, Ask an Expert

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Evans Company has the following information:

Annual demand -----------------------------------------4,000 units

Current order size---------------------------------------1,000 units

Ordering cost per order--------------------------------$100

Carrying cost per unit for one year --------------- $5

Lead time (Max 15 days)----------------------------- 10 days

Working year --------------------------------------------- 250 days

Question 1: The economic order quantity (EOQ) for Evans company is ?

Question 2: What total amount of safety stock should Evans company hold to prevent stockouts due to uncertainty in demand and delivery?

Question3 : Evans company is currently using an order size of 1,000 units. what is the annual saving to Evans company if they were to change from an order size of 1000 to teh economic order quantity?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9949302

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