- This topic has 3 replies, 2 voices, and was last updated 7 years ago by
.
- Posts
Purchase price: $15 per item
Carriage costs: $50 per order
Ordering costs: $5 per order
Storage costs: 10% of purchase price plus $0.20 per unit per annum
Annual demand is 4000 unitsAfter calculating holding cost, am getting $1.7 per unit.
But am not getting the answer for EOQ, after putting this figure in the formula.
Please tell me if i have rightly calculated the holding cost?Yes – the holding cost is $1.70 per unit.
So for the formula:
Ch = 1.70
Co = 55
D = 4,000So the EOQ = 509 units
(Surely there are workings for the answer in your book? If not, then you should be using a Revision Kit from one of the ACCA approved publishers – they have answers and workings)
Am using a revision kit & i don’t have the detailed answer. Thank you very much for the answer. i was using $5 only as Co. I couldn’t make out carriage (transport) cost is included in the cost of ordering.
- The topic ‘Economic Order Qty’ is closed to new replies.