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Economic order quantity-current inventory policy
Course:- Financial Management
Reference No.:- EM131077978




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Economic Order Quantity (EOQ): (This problem is similar to Problem 28-12)

Viking Manufacturing, Inc. currently begins each sales cycle with 12,500 vacuum cleaners in stock. This stock is depleted at the end of each sales cycle and then reordered. The firm currently places 42 orders per year. The carrying cost per vacuum cleaner is $24.69 per year and the fixed order cost is $5,000. Assuming there is no shortage cost for this firm.

REQUIRED QUESTIONS (for Economic Order Quantity (EOQ)):

What is the total carrying cost of the current inventory policy? (Numeric answer question) (Do not include the dollar sign ($). Round your answer to 2 decimal places. (e.g., 32.16))

What is the restocking cost of the current inventory policy? (Numeric answer question) (Do not include the dollar sign ($). Round your answer to 2 decimal places. (e.g., 32.16))

What is the total cost of current inventory policy? (Numeric answer question) (Do not include the dollar sign ($). Round your answer to 2 decimal places. (e.g., 32.16))

Calculate the economic order quantity. (Round your answer to 2 decimal places. (e.g., 32.16))

How many orders per year would Viking Manufacturing require if the new EOQ Inventory Policy were implemented? (Numeric answer question) (Round your answer to 2 decimal places. (e.g., 32.16))

What is the savings the firm would receive if it changed to EOQ inventory policy? (Numeric answer question) (Do not include the dollar sign ($). Round your answer to 2 decimal places. (e.g., 32.16))

Should Viking Manufacturing increase or decrease its order size?(“Select from a drop down list” question)

How would a change in order size affect the firm’s inventory account balance and its inventory turnover ratio for 2016? Explain your answer.(Essay question)




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