ABC Inc
Subject:Project ManagementPrice: Bought3
ABC Inc. has collected the following information on one of its products:
Demand = 5,000 units/year
Ordering costs = $12/order
Holding costs = $4/unit/year
Lead-time = 5 days weeks
Unit cost = $748/unit
Number of weeks per year = 50 weeks
Please answer the following questions:
a. The firm currently orders 500 units per order. What is the total cost of ordering and holding these goods under this system? b. Determine their economic order quantity and cost of ordering and holding goods using the EOQ.
c. Which ordering policy leads to a lower total cost? How much does this ordering policy save
