Eoq cost accounting

cost accounting

1. Quantitative Models For Material Planning and Control Chapter No.13

2. Economic Order Quantity EOQ= 2*Annual Required Units* Cost per Order Cost per Unit * Carrying Cost percentage EOQ= 2*12500*36 1 =9000000 =3000 Units

3. Safety Stock Maximum Maximum Use per day = 600 Units Normal Use per day = 500 Units Safety Stock Maximum = 100 Units

4. Order Point Normal Use per day*Lead time(500*5)= 2500 +Safety Stock = 500 Order Point = 3000

5. Normal Maximum Inventory Order Point =3000 units -Normal use during lead time = 2500 units On hand at time order received =500 units +Quantity Ordered = 3000 units Normal Maximum Inventory = 3500 units

6. Absolute Maximum Inventory Order Point =3000 units -Minimum use during lead time = 500 units On hand at time order received =2500 units +Quantity Ordered = 3000 units Absolute Maximum Inventory = 5 500 units

7. Average Inventory Assume Normal Lead time and Usage Economic Order Quantity /2 =1500 units +Safety Stock = 500 units Average Inventory Assume Normal Lead time and usage = 2000 units