Kromberg uses electrical assemblies to produce an array of small appliances. One of its high cost / high volume assemblies, the YY-22, has an estimated annual demand of 8,000 units. Kromberg estimates the cost to place an order is $50, and the holding cost for each assembly is $20 per year. The company operates 250 days per year. The purchasing manager decides that, in order to save purchasing time, orders for the YY-22 will be placed every three months, or four times per year. How much does this approach cost Kromberg in total annual holding and ordering costs (instead of Kromberg ordering using the EOQ quantity?

Question

Answer

Greater than $18,000

Answer

Greater than $10,000 but less than or equal to $14,000

Answer

Less than or equal to $10,000

Answer

Greater than $14,000 but less than or equal to $18,000

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Kromberg uses electrical assemblies to produce an array of small appliances. One...

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