73) Use the information in Scenario 9.1. What are the annual ordering costs if Talbot orders using the EOQ quantity?
A) less than or equal to $1,000B) greater than $1,000 but less than or equal to $2,500C) greater than $2,500 but less than or equal to $4,000D) greater than $4,000Answer: BReference: Economic Order QuantityDifficulty: ModerateKeywords: EOQ, economic order quantity, inventory holding costAACSB: Analytic skills
9-15

74) Use the information in Scenario 9.1. What are the total annual holding and ordering costs if Talbot orders using the EOQ quantity?
75) Use the information in Scenario 9.1. What is the cycle length (time between orders) when orders are placed using the EOQ quantity?
76) Use the information in Scenario 9.1. How many times per year must Talbot order the XO-01 when orders are placed using the EOQ quantity?
9-16

77) Use the information in Scenario 9.1. The purchasing manager decides that, in order to save purchasing time, orders for the XO-01 will be placed every three months, or four times per year. How much does this approach cost Talbot in total annual holding and ordering costs(instead of Talbot ordering using the EOQ quantity)?
A) greater than $18,000B) greater than $14,000 but less than or equal to $18,000C) greater than $10,000 but less than or equal to $14,000D) less than or equal to $10,000Answer: BReference: Economic Order QuantityDifficulty: ModerateKeywords: EOQ, economic order quantity, total inventory holding and ordering costsAACSB: Analytic skills
Scenario 9.2
The Burdell Company is a small manufacturing company that uses gear assemblies to
produce four different models of mountain bikes. One of these gear assemblies, the "Smooth
Shifter", is used for the two most expensive of Burdell's four models, and has an estimated
annual demand of 300 units. Burdell estimates the cost to place an order is $40, and the
holding cost for each assembly is $60 per year. The company operates 250 days per year.

#### You've reached the end of your free preview.

Want to read all 60 pages?

- Fall '12
- SusanSherer
- analytic skills