A manufacturing set-up has an expected usage of 50000 units, Cost Accounting

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A manufacturing set-up has an expected usage of 50000 units

A manufacturing set-up has an expected usage of 50,000 units of a certain product during the next year. The cost of processing an order is $ 20 and the carrying cost per unit is $ 0.50 for one year. Lead time on an order is 5 days and the company will keep a reserve supply of 2 days usage. One is required to calculate:

a) the economic order quantity

b) the reorder point (assume 250-day year)

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Cost Accounting: A manufacturing set-up has an expected usage of 50000 units

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