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Magnetron, Inc. manufactures microwave ovens for the commercial market. Currently, Magnetron is producing part 2104. Next year's requirement for part 2104 is estimated at 20,000 units. Part 2104 is valued at $50 per unit, and the combined storage and handling cost is $8 per unit per year. The cost of preparing the order and making the production setup is $200.
a. Compute the economic order quantity
b. How many orders will be placed every year?
c. What is the expected annual holding cost?
d. What is the expected annual order cost?
Image text transcribed for accessibility: Magnetron, Inc. manufactures microwave ovens for the commercial market. Currently, Magnetron is producing part 2104. Next year's requirement for part 2104 is estimated at 20,000 units. Part 2104 is valued at $50 per unit, and the combined storage and handling cost is $8 per unit per year. The cost of preparing the order and making the production setup is $200. Compute the economic order quantity How many orders will be placed every year? What is the expected annual holding cost? What is the expected annual order cost?

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