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For supply item ABC, Andrews Company has been ordering 125 units based on the recommendation of the salesperson who calls on the company monthly. A new purchasing agent has been hired by the company who wants to start using the economic-order-quantity method and its supporting decision elements. She has gathered the following information:
Annual demand in units
1,750
Days used per year
250
Lead time, in days
28
Ordering cost
$100
Annual unit carrying costs
$35
Determine the EOQ, average inventory, orders per year, average daily demand, reorder point, annual ordering costs, and annual carrying costs.
Calculate Lezolis contribution margin per unit and contribution margin ratio and if the company's fixed costs total $6,660, determine how many clocks Lezoli must sell to break even.
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