Economic order quality or eoq, Cost Accounting

Assignment Help:

Economic Order Quality or EOQ

Define the model and the three methods of computing the EOQ.

1. Assumptions of the model.

Illustration

The given information was extracted from the books of Danex Holdings relating to its stocks as:

 i.

 Reorder quantity

1,800

 ii.

 Reorder period

4 weeks

 iii.

 Maximum consumption

450 units/week

iiv.

 Normal consumption

300 units/week

 v.

 Minimum consumption

150 units/week

 vii

 Maximum reorder period

5 weeks

 vii

 Minimum reorder period

3 weeks

Required

Find out the given stock levels for Danex Holdings as:

i. Minimum stock level

ii. Maximum stock level

iii. Re-order level

Solution

i) Re-order level 

=  Maximum consumption X maximum reorder  period

= 450 units X 5 weeks

= 2,250 units

ii) Maximum stock level 

= reorder level + reorder quantity-(Minimum consumption X minimum reorder period)

= 2250 + 1800 - (150 X3) = 4050 - 450 = 3600 units

iii) Minimum stock level

= Reorder level - (Normal consumption X normal reorder period)

= 2,250 - (300 X 4) = 2250 - 1200 = 1050 units


Related Discussions:- Economic order quality or eoq

Compute the irr, Matheson Electronics' Canadian Branch will help introduce ...

Matheson Electronics' Canadian Branch will help introduce into Canada the just developed new electronic device which, when mounted on an automobile, will tell the driver how many m

Calculate what variances have arisen, The following details were extracted ...

The following details were extracted from the standard cost card of a component:       Raw Materials              2.82 Kgs @ Rs.4.80 Kg.     Direct Labour            Type I   6

Depreciation (to be computed), I just do not know which form those numbers ...

I just do not know which form those numbers should go in. I would canculate the results myself. Thanks John and Ellen Brite are married and file a joint return. They have no depend

Give annual report project, Give Annual report project: You will pick ...

Give Annual report project: You will pick a publically trade company to do the analysis on with approval of the professor . the following is an outline of what should be in th

What would be the impact on net income, Brandywine Homecare, a not-for-prof...

Brandywine Homecare, a not-for-profit business, had revenues of $12 million in 2011. Expenses other than depreciation totaled 75 percent of revenues, and depreciation expense was $

Compute the total amount of current assets, Balance Sheet Classi?cations an...

Balance Sheet Classi?cations and Relationships: Shelley and Co. has the following balance sheet elements as of December 31, 2012. Land. . . . . . . . . . . . . . . . . . . . . .

Determine which project is more lucrative - investment , The Zooline Compan...

The Zooline Company (Pty) Ltd is an American based company that focuses on the LSM 8 -10 markets. They do vehicle interiors, raise or lower suspensions and install top end sound sy

Cost - terms used in cost accounting, Cost - Terms Used in Cost Accounting ...

Cost - Terms Used in Cost Accounting It measures the economic sacrifice created to achieve an organizations aims. For a product, cost represents the monetary measurement of re

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd