Barbara is the purchasing agent for west valve company they, Finance Basics

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Barbara is the purchasing agent for west valve company they

Question: Barbara is the purchasing agent for West Valve Company. They have an annual demand of 4,000 units. The cost for each unit is $90, and the carrying cost is estimated to be 10% of the cost of each unit. The average ordering cost is $25 per order. It takes 2 weeks for an order to arrive from the supplier and during that time, demand per week is 80 units.

What is the EOQ?

What is die ROP?

Is the ROP greater than EOQ and if so, how is this handled?

What is the average inventory?

What is the annual holding cost?

How many orders per year would be placed?

What is the annual ordering cost?

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