Economic Order Quantity - EOQ
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Annual demand: 2500
Holding cost per bracket per year: $1.50
Order cost per order: $18.75
Lead time: 2 days
Working days per year: 250
Please answer the following questions:
A. What is the Economic Order Quantity (EOQ)?
B. Given the EOQ: What is the annual inventory holding cost?
C. Given the EOQ: What would be the average inventory?
D. Given the EOQ: How many orders would be made each year?
E. Given the EOQ: What would be the annual order cost?
F. Given the EOQ: What is the total annual cost of managing the inventory?
G. What is the time between orders?
H. What is the reorder point?
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Solution Summary
The solution defines Economic Order Quantity (EOQ) and provides a step-by-step explanation given the EOQ to each of the inventory questions listed in the long description.
Solution Preview
Below are the answers to the given questions:
A. What is the Economic order quantity (EOQ)?
= sqrt (2 x demand x ordering cost / holding cost)
= sqt ( 2 x 2500 x 18.75 / 1.5)
= 250 units.
B. Given the EOQ: What is the annual inventory holding cost? ...
Education
- BE, Bangalore University, India
- MS, University of Wisconsin-Madison
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