## Total annual inventory cost , Managerial Accounting

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Ross White's machine shop uses 2,500 brackets during the course of a year, and this usage is relatively constant by the year. These brackets are purchased from a supplier 100 miles away for \$15 every, and the lead time is 2 days. The holding cost per bracket anually is \$1.50 (or 10% of the unit cost) and the ordering cost per order is \$18.75. There are 300 working days per year.

(a) What is the EOQ?

(b) Given the EOQ, what is the average inventory? What is the yearly inventory holding cost?

(c) In minimizing cost, how many orders would be made every  year? What would be the annual ordering cost?

(d) Given the EOQ, what is the total annual inventory cost (having purchase cost)?

(e) What is the time between orders?

(f) What is the ROP?

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