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    kimg0103's Avatar
    kimg0103 Posts: 1, Reputation: 1
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    #1

    Mar 22, 2009, 07:03 PM
    Total annual inventory cost
    Novelty Gifts, Inc. is expecting some inventory control problems. The manager, currently orders 5,000 units four times each year to handle annual demand of 20,000 units. Each order costs $15 and each unit cost $1.50 to carry. The manager maintains a safety stock of 200 units.


    Questions:

    A. What is Novelty's current total annual inventory cost?

    B. Calculate the economic ordering quantity.

    C. What is the average inventory under EOQ if the manager maintains a safety stock of 200 units?

    D. Calculate the total annual inventory cost under EOQ.
    cheadoch's Avatar
    cheadoch Posts: 2, Reputation: 1
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    #2

    Jun 2, 2010, 08:10 AM
    Total annual cost = annual ordering cost + annual carrying cost
    Annual ordering cost = number of orders * cost of ordering
    Annual carrying cost = average inventory * cost of holding
    Number of orders = annual demand / order quantity
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #3

    Jun 2, 2010, 05:48 PM

    cheadoch, we are not here to just answer people's homework for them. Please review our guidelines about homework:
    https://www.askmehelpdesk.com/financ...-b-u-font.html
    This goes for those asking and those responding, so this also goes for your homework question on the Retirement board.

    (You should also post homework in the homework area.)

    Also watch the dates on the posts. The search feature tends to drag up old posts.
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