I have the following problem:
A critical piece of operational equipment contains 30 parts of the same type. The equipment operates 24 hours a day and the critical pieces have a predicted failure frequency of 10,000 hours.
If spares are procured as part of an EOQ policy with: cost per unit of $100, cost of preparation and shipping of $25, an estimated cost of managing an item in inventory of 25% of the inventory value, what is the order quantity and annual costs?
I know:
c = item cost per unit = $100
k = fixed cost per order = $25
h = 25% per year
I need to know:
A = annual demand
since I would use the eqn for EOQ:
EOQ = sqrt((2*k*A)/(h*c))
How do I solve for the annual demand so that I can use the equation above to get the order quantity?
Solution Preview
Machine Operates 24 hours per day,
Total days in a year = 365 x 24 = 8760 ...
Solution Summary
This solution shows step-by-step calculations to determine the expected number of parts needed using total days in a year, probability of a failing part and number of parts in the equipment.
... to know how much to order when inventory gets to zero. ... Applying the economic order quantity formula. ... of ((2DS)/H) D= Annual demand= 50000 S= ordering cost per ...
... We get that the optimal number of units to order each ... would be the total cost if we ordered the minimum ... holding costs, it would be optimal to order less than ...
...orders 30,000 units per year and gets discounted price ... minimum at order quantity of 30000 units per order. ... of regression equation= 15.5757 Thus we get Y=15.5757 ...
... in hopper machines only when they get emptied which ... has to wait until resin gets filled. ... is not foolproof against incorrect plastic insert getting into assembly ...
... ways and means to be used to get to where ... skills game Resources for production are getting scarce w ... How do you define the Emergency Order Quantity(EOQ) in your ...
... the inventory holding costs and ordering costs to ... several assumptions that the Economic Order Quantity model uses. ... always true that the inventory gets used at ...
... and it takes you a half-hour to get cash from ...Ordering cost H= Per Unit Holding Cost Q= Quantity Ordered D= Annual ... to equate d(TC)/dQ to 0 in order to minimize ...
...quantity)*Ordering cost, where Annual demand/Order quantity gives ... carrying cost = (Q/2)* Ch As ordering cost = inventory ... this equation for Q we get Q* = √2*D ...
...Ordering cost include costs associated with getting an item into ... It is composed of purchase order, shipping cost ...Ordering cost increases as the number of orders...
