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?

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? ...

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.

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