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

#title.journal., conard transfered 10000 from her account to the business

conard transfered 10000 from her account to the business

Determine the single limiting factor, Determine the Single Limiting Factor ...

Determine the Single Limiting Factor A company manufactures and sells three products as A, B and C. The unit cost and revenue structure for every product and its maximum forec

Assignment, what do you understand by cost accounting and what are the main...

what do you understand by cost accounting and what are the main decision areas that are involved

Limitations of standard costing system, The use of standard costs can prese...

The use of standard costs can present a number of potential problems or disadvantages. Most of these problems result from improper use of standard costs and the management by excep

Calculate the reduction in failure costs per unit, Each unit of a product r...

Each unit of a product requires four components. The average number of components is 4.25 due to component failure. Purchasing higher quality components can reduce the average numb

Compute the manufacturing overhead costs, Go the Hershey website to learn h...

Go the Hershey website to learn how to make Hershey chocolate. Review the process and take a look at some of the videos. Pay particular attention to the process steps of milling an

four decisions for which abc information is useful, What are the key reaso...

What are the key reasons for product cost differences among traditional costing system and ABC systems? Explain four decisions for which ABC information is useful?

Investment, under which type of asset the investment comes

under which type of asset the investment comes

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