Optimum Order And Economic Order Quantity

Question

You are managing a business that stocks backpacks for extreme adventure use. You have one purchasing agent who receives an annual salary of $45000. She processes 2500 purchase requests for backpacks per year. Average backpack inventory in storage is $75000 and the total cost of running the backpack portion of the warehouse is $15000. You are told that your company purchases 1000 backpacks per year at a cost of $150.00 per backpack.

Using the Economic Order Quantity formula (EOQ), how many backpacks should be ordered at one time?

Summary

The question belongs to Accounting and it discusses about a scenario of a backpack stocking business. The question discusses about finding the Economic Order Quantity for ordering at any point in time. This has been discussed in the solution with necessary calculation.

Total Word Count 71