Total cost of inventory implied by economic order quantity

Assignment Help Financial Management

Reference no: EM131831624

Management at Admore Farm and Seed has never analyzed the costs associated with their inventory policy, and they currently have a large stock of insecticide in the warehouse. They estimate that it costs $25 to place an order, and it costs $0.25 per gallon to hold the spray. The firm requires 80,000 gallons for the year (assume 365 days). (EOQ- Economic order quantity)

a. Calculate the EOQ

b. Calculate the total cost of inventory implied by the EOQ from a.

c. Calculate the total cost of inventory at the EOQ ± 1,000 gallons

d. If it takes 7 days to receive an order from suppliers, determine the appropriate reorder point.

Reference no: EM131831624

Questions Cloud

Write a thesis statement on second hand smoke : Write a thesis statement on Second hand smoke. Present Opposing Views and Theories using Researc. Present Rebuttals to Opposing Arguments using Research.

Calculate the breakeven sales level for the price increase : Calculate the breakeven sales level for the price increase that the shop’s owner is considering, and justify your answer.

What rate of return before income and property taxes : What rate of return before income and property taxes will the company receive by buying the land instad of leasing it?

Purpose of organization total reward system : What could a company do to improve its total rewards system?

Total cost of inventory implied by economic order quantity : Calculate the total cost of inventory implied by the EOQ from a. determine the appropriate reorder point.

Knowledge and skill requirement for advancement : Why is it important for a company to articulate the knowledge and skill requirement for advancement?

Determine description of the specific product or service : For Milestone One, you will submit a draft of your introduction. Your introduction will include a profile of the organization.

Decrease in communication skills : Do you think the ability to communicate quickly with technology has resulted in a decrease in communication skills? Why or why not?

Briefly describe a marketting research problem : Briefly describe a MARKETTING research problem and then choose either an observational or a survey research methodology to address the problem.

User Account

All Pages