Business Finance
Grantham Week 3 Chapter 6 P System Fixed Period Problems Paper

Grantham University

Question Description

  • Complete questions 1, 3, 4, 5 and 6 on pages 227 and 228.



Grading Criteria AssignmentsMaximum Points
Meets or exceeds established assignment criteria40
Demonstrates an understanding of lesson concepts20
Clearly presents well-reasoned ideas and concepts30
Uses proper mechanics, punctuation, sentence structure, and spelling10
Total100

Final Answer

Here is the answer. Thank you.
Attached.

Question No: One (01)
(a) Annual Demand = 500 Boxes
Cost per Order = $4.00
Holding Cost per Unit = $0.40
Total Units under Current per Order = 200 Boxes
Annual Holding Cost = [(200/2)*0.40] = $40.00
Annual Ordering Cost = [(500/200)*4.00] = $10.00
Total Annual Inventory Holding and Ordering Cost = ($40.00+$10.00) = $50.00
(b) Economic Order Quantity (EOQ) = [(2*500*4.00)/0.40]1/2 = 100 Boxes
Annual Holding Cost = [(100/2)*0.40] = $20.00
Annual Ordering Cost = [(500/100)*4.00] = $20.00
Total Annual Inventory Holding and Ordering Cost = ($20.00+$20.00) = $40.00
Question No: Three (03)
(a) Annual Demand = 480 Units
Cost per Order = $15.00
Holding Cost per Unit = ($35.00*20%) = $7.00
Economic Order Quantity (EOQ) = [(2*480*15.00)/7.00]1/2 = 45.36 (units)
Total 45.36 units (approximately) should be ordered at a tim...

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