Abey Kuruvilla, of Parkside Plumbing, uses 1,200 of a certain spare part that costs $25 for each order, with an annual holding cost of $24. a) Calculate the total cost for order sizes of 25, 40, 50, 60, and 100. b) Identify the economic order quantity and consider the implications for making an error in calculating economic order quantity.

Purchasing and Supply Chain Management
6th Edition
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Chapter16: Lean Supply Chain Management
Section: Chapter Questions
Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...
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Abey Kuruvilla, of Parkside Plumbing, uses 1,200 of a certain spare part that costs $25 for each order, with an annual holding cost of $24.
a) Calculate the total cost for order sizes of 25, 40, 50, 60, and 100.
b) Identify the economic order quantity and consider the implications for making an error in calculating economic order quantity.

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