Economic order quality or eoq, Cost Accounting

Assignment Help:

Economic Order Quality or EOQ

Define the model and the three methods of computing the EOQ.

1. Assumptions of the model.

Illustration

The given information was extracted from the books of Danex Holdings relating to its stocks as:

 i.

 Reorder quantity

1,800

 ii.

 Reorder period

4 weeks

 iii.

 Maximum consumption

450 units/week

iiv.

 Normal consumption

300 units/week

 v.

 Minimum consumption

150 units/week

 vii

 Maximum reorder period

5 weeks

 vii

 Minimum reorder period

3 weeks

Required

Find out the given stock levels for Danex Holdings as:

i. Minimum stock level

ii. Maximum stock level

iii. Re-order level

Solution

i) Re-order level 

=  Maximum consumption X maximum reorder  period

= 450 units X 5 weeks

= 2,250 units

ii) Maximum stock level 

= reorder level + reorder quantity-(Minimum consumption X minimum reorder period)

= 2250 + 1800 - (150 X3) = 4050 - 450 = 3600 units

iii) Minimum stock level

= Reorder level - (Normal consumption X normal reorder period)

= 2,250 - (300 X 4) = 2250 - 1200 = 1050 units


Related Discussions:- Economic order quality or eoq

introduction of internal rate of return , Introduction of Internal Rate of...

Introduction of Internal Rate of Return The traditional internal rate of return (IRR) method of project selection has been shown to be inferior to the NPV method due to vario

Question, mojor elements of cost sheet

mojor elements of cost sheet

Material costs, Material Costs Material refers to each physical input ...

Material Costs Material refers to each physical input into the production procedure. They involve the giving as: Raw material refers to bought in material that is used

Depreciation (to be computed) by slm method, sabonis consmetics co. purchas...

sabonis consmetics co. purchased machinery on december 31,2011, paying $50,000 down and agreeing to pay the balance in four equal installments of $40,000 payable each dec 31. an as

Journal entry for sale of machinery, Rayya Co. purchases and installs a mac...

Rayya Co. purchases and installs a machine on January 1, 2013, at a total cost of $105,000. Straight-line depreciation is taken each year for four years assuming a seven-year life

Labour variances, Labour Variances From our basic data, we can ca...

Labour Variances From our basic data, we can calculate the labour variances as given as: i. Labour Rate Variance = (AH x AR) - (AH  x SR)

Prepare cash flow statement, The following details are available from a com...

The following details are available from a company:                                                  2003                 2004                                      2003

Material usage variance, Describe briefly the possible causes of: (i)   ...

Describe briefly the possible causes of: (i)   the material usage variance, (ii)  the labour rate variance, (iii)  the sales volume profit variance.

MATERIALCOSTING, what are the material management questions

what are the material management questions

Cost sheet, Marple Associates is a consulting firm that specializes in info...

Marple Associates is a consulting firm that specializes in information systems for construction and landscaping companies. The firm has two offices-one in Houston and one in Dallas

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd