Solution-Calculate cooler total ordering and carrying costs

Calculate cooler total ordering and carrying costs

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Reference no: EM133011747

Cooler Corporation is a manufacturer of cooling products. It purchases 14,400 units of a particular component (CK55) each year at a cost of $60 per unit. Cooler Corporation requires a 12% annual rate of return on investment. In addition, relevant carrying costs for insurance, material-handling, and breakage are $0.40 per unit per quarter, whereas warehousing rental cost is $12,000 per month. Relevant costs per purchase order are $144.00. Purchasing manager's salary is $80,000 per year.

Required:

Problem 1: Calculate Cooler's EOQ for CK55.

Problem 2: Calculate Cooler's total ordering and carrying costs.

Problem 3: Assume that demand is uniform throughout the year and is known with certainty. The purchasing time is half a month. Calculate the reorder point for CK55

Reference no: EM133011747

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Calculate cooler total ordering and carrying costs

Reference no: EM133011747

Reference no: EM133011747

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