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?
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.
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