contestada

JoeFit, Inc. is using the basic FOQ model to manage its inventory for K2 microprocessors. The setup cost per order is $200 and the inventory carrying cost is $0.05 per chip per year. Suppose the company is placing the optimal order quantity in each order and the resulting total annual setup and carrying costs are $32,000. What is the annual demand of the K2 microprocessors

Respuesta :

Answer:

51.2 million

Explanation:

The computation of the annual demand is shown below:

As we know that the total annual setup cost and the carrying cost would be equivalent to EOQ

Since the total annual setup cost & carrying cost is $32,000

So, for each it would be $16,000

Now

Total number of orders is

= $16000 ÷ $200

= 80 orders

And, Total inventory carrying cost = 0.05 × (EOQ ÷ 2)

$16000 = 0.05 × EOQ ÷ 2

$32000 ÷ 0.05 = EOQ

EOQ = 640000 units

Now

Total demand = 640000 × 80

= 51200000

= 51.2 million

The annual demand for the K2 microprocessors is 51.2 million.

The total annual setup and carrying costs are $32,000, therefore, the value of each will be:

= $32000/2

= $16000.

The total number of orders will be:

= 16000/200 = 80 orders

The economic order quantity will be:

16000 = 0.05 × (EOQ/2)

EOQ = 32000/0.05

EOQ = 640000

The total demand will be:

= 640000 × 80 = 51.2 million

In conclusion, the annual demand of the K2 microprocessors is 51.2 million.

Read related link on:

https://brainly.com/question/19542745

Otras preguntas