Answered: Annual demand * [ (fixed cost / #…

Business

Accounting

Annual demand * [ (fixed cost / # orders per year) + variable cost] EOQ= 3 Annual Inventory *Σ Cost % i į

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Prove in four (and only four, no more, no less) logical steps that the following expression is TRUE or FALSE :

(IMAGE)

, where i=1, capital cost; i=2, storage cost; i=3, risk cost.

Annual demand * [ (fixed cost / # orders per year) + variable cost ]
EOQ=
3
Annual Inventory *Σ Cost % i
į

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