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    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 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.

    $2.19

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