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Using the POQ Method of Ordering, Calculate the Total Cost

Question 5

Multiple Choice

Using the POQ method of ordering, calculate the total cost of carrying and ordering inventory for the 6 week period shown. Use a POQ = 3 weeks for your answer.
 Week 123456 Net requirements 604010502030 Planned order receipts  Ending inventory \begin{array} { l c c c c c c } \text { Week } & 1 & 2 & 3 & 4 & 5 & 6 \\\text { Net requirements } & 60 & 40 & 10 & 50 & 20 & 30 \\\text { Planned order receipts } & & & & & & \\\text { Ending inventory } & & & & & &\end{array}
Cost to place an order = $100.00
Cost to carry inventory = $1.00 per unit per week
Annual demand = 1,500 units
Cost per unit = $200.00
Opening inventory = 0 units


A) $140
B) $280
C) $340
D) $400
E) none of the above

Correct Answer:

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