Reference no: EM132618937

The following information has been gathered for Product A:

Annual demand                             760 units

Purchase price per unit                    $300

Orders per year                              10

Average daily demand                    2.5 units

Lead time in days                           10

Cost of placing an order                  $40

Relevant insurance, handling. etc costs   $8

Required return                                  10%

Problem 1) What is the economic order quantity for Product A?

A) 9 units

B) 10 units

C) 20 units

D) 40 units

E) 46 units

Problem 2) What are the annual carrying costs for Product A if the company orders at the EOQ amount?

A) $80

B) $320

C) $760

D) $160

E) $1,520

Problem 3) What are the annual ordering costs for Product A if the company orders at the EOQ amount?

A) $320

B) $160

C) $1,520

D) $80

E) $760

Problem 4) What is the reorder point for Product A?

A) 38

B) 25

C) 30

D) 80

E) 100