ABC Company sells 2,976 chairs a year at an average price per chair of $161. The...

ABC Company sells 2,976 chairs a year at an average price per chair of $161. The carrying cost per unit is $15.22. The company orders 500 chairs at a time and has a fixed order cost of $101 per order. The chairs are sold out before they are restocked. What is the economic order quantity?

Your friend from Netherlands is planning to visit you in the United States. You estimate the cost of her trip at $5,410. What is the cost to her in euros if 1 Euro = $1.4001

You can exchange $1 for either C$1.2931 or ¥138.07. What is the cross rate between the Japanese yen and the Canadian dollar? That is, solve for ¥ per C$.

Expert Solution

Solution:

1st	economic order quantity = 199 chair

Working Notes:

	economic order quantity (EOQ )= SQRT(2 × Quantity × Cost Per Order / Carrying Cost Per unit)

	Quantity Q = 2,976 units
	Ordering cost per order = $ 101 per order
	Carrying cost = $ 15.22 per unit

	economic order quantity (EOQ )= SQRT(2 × Quantity × Cost Per Order / Carrying Cost Per unit)
	EOQ = SQRT(2 ×2,976 ×101 / 15.22)
	EOQ = (2 x 2976 x 101 / 15.22)^(1/2)
	EOQ =198.73978
	EOQ =199 chair

2nd	The cost to her in Euros = 3,864 Euros

Working Notes:

	1 Euro = $1.4001
	1$ = 1/1.4001 Euro

Hence	For $5,410

	The cost to her in Euros = Dollar cost x 1$ value in Euros
	=(5,410 x 1/1.4001) euros
	=3,864.009714 euros
	=3,864 euros

3rd
	1C$= ¥106.77

Working Notes:
	$1 =C$1.2931	1st
	$1 = ¥138.07	2nd

	From 1st & 2nd
We get
	C$1.2931 = ¥138.07	3rd

then	C$1.2931 = ¥138.07	using 3rd
	C$1 = ¥138.07/1.2931
	C$1 = ¥106.77

Please feel free to ask if anything about above solution in comment section of the question.

jeff jeffy answered 10 months ago

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