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Queen Manufacturing uses 2,700 switch assemblies per week and then reorders another 2,700 ．The relevant carrying cost per switch assembly is $11.00\$ 11.00 and the fixed order cost is $1,350\$ 1,350 ．
a．What is the current carrying cost？（Do not round intermediate calculations and round your answer to the nearest whole number，e．g．，32．）
b．What is the order cost？（Do not round intermediate calculations and round your answer to the nearest whole number，e．g．，32．）
c．What is the EOQ？（Do not round intermediate calculations and round your answer to 2 decimal places，e．g．，32．16．）
\begin{tabular}{|l|l|}
\hline a．Carrying cost & \\
\hline b．Order cost & \\
\hline c．EOQ & \\
\hline
\end{tabular}
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Answer from Sia
Posted 3 months ago
Solution by Steps
step 1
To calculate the current carrying cost, we use the formula: Carrying Cost=Number of Units×Carrying Cost per Unit \text{Carrying Cost} = \text{Number of Units} \times \text{Carrying Cost per Unit} . Here, the number of units is 2,700 and the carrying cost per unit is $11.00. Thus, we have: \( \text{Carrying Cost} = 2,700 \times 11.00 \)
step 2
Calculating the carrying cost: 2,700×11.00=29,700 2,700 \times 11.00 = 29,700 . Therefore, the current carrying cost is $29,700
step 3
To find the order cost, we use the formula: Order Cost=Fixed Order Cost \text{Order Cost} = \text{Fixed Order Cost} . The fixed order cost is given as $1,350. Thus, \( \text{Order Cost} = 1,350 \)
step 4
The order cost is therefore $1,350
step 5
To calculate the Economic Order Quantity (EOQ), we use the formula: EOQ=2DSH \text{EOQ} = \sqrt{\frac{2DS}{H}} , where D D is the demand (2,700 units/week), S S is the fixed order cost (1,350), and \( H \) is the carrying cost per unit (11.00). Thus, we have: EOQ=2×2700×135011 \text{EOQ} = \sqrt{\frac{2 \times 2700 \times 1350}{11}}
step 6
Calculating the EOQ: First, calculate 2×2700×1350=7,290,000 2 \times 2700 \times 1350 = 7,290,000 . Then, divide by 11: 7,290,00011=663,636.36 \frac{7,290,000}{11} = 663,636.36 . Finally, take the square root: EOQ=663,636.36≈814.56 \text{EOQ} = \sqrt{663,636.36} \approx 814.56 . Thus, the EOQ is approximately 814.56
Answer
a. Current Carrying Cost: $29,700
b. Order Cost: $1,350
c. EOQ: 814.56
Key Concept
The Economic Order Quantity (EOQ) model helps businesses minimize total inventory costs by determining the optimal order size.
Explanation
The carrying cost reflects the expense of holding inventory, while the order cost is the fixed cost incurred each time an order is placed. The EOQ balances these costs to minimize total inventory expenses.

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