(Answered) Question - the sears company is using a purchased component

Accounting

Question - The Sears Company. is using a purchased component in their own assembly. The production runs 52 weeks/year and the consumption of the component is evenly distributed over the year. The purchase price is $23. The inventory carrying cost is 20%. The administrative cost for each purchase is $85. The component can only be purchased in regular tens (i.e. 10, 20, 30, 40 et c).

Week 1 2 3 4 5 6 7 8 9 10 11 12

Demand 19 24 21 18 23 14 31 19 21 20 21 21

The company wants to calculate the Economic Order Quantity. How much shall they order each time, assume that the 12 weeks of demand above is representative for the full year.

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