The Equation Method for Computing Economic Order Quantity

For each of the following independent cases, use the equation method to compute the economic order
quantity.
Case A Case B Case C
Annual requirement (in units) ................................................ 13,230 1,681 560
Cost per order ..........................................................................$250 $40 $10
Annual holding cost per unit ....................................................... 6 20 7

Solution Preview

This is calculated with a square root function on your calculator. I will use the abbreviation SR to show ...

Solution Summary

This solution calculates the economic order quantity for case A, B, and C. All calculations are provided.

Sales are estimated to be 4,500 (d) units annually at $3,000 each. The cost of each unit for Taylor Incorporated is $1,200 (v). Inventory carrying cost is (c) 5% of the cost value of the device. Order placement (p) cost is $60.
I need to know theEconomicOrderQuantity (EOQ).
I already have theequation I just not sure

If D = 9,000 per month, S = $45 per order, and H = $2 per unit per month, what is theeconomicorderquantity?
Round your answer to the nearest whole number; for example, 1234. Please show your work.

What is theEconomicOrderQuantity technique and what are the basic assumptions the model formula follows? What are some different companies that could benefit from using this type of inventory management and why?

A bakery uses 700 bags of flour per week and works 45 weeks per year. The flour costs $25 per bag. Each time that order is issued it will cose the bakery $100. Carrying costs of the inventory are 15% of unit costs. Determine theeconomicorderquantity, reorder point, and the average inventory for this bakery.

Lakefield Ice Ltd. sells 25,000 windows per year. The carrying cost per window is $3.70. Currently they order 1,000 windows at a time with a fixed cost per order of $38. If they switch to using economicorderquantity, how much can they reduce their total inventory costs?

As the production manager, you need to minimize both ordering and inventory costs. You need to provide a recommendation of the optimal orderquantity of raw materials to your plant manager. Your objective is to determine theeconomicorderquantity (EOQ). If the annual demand for Ultamyacin at Wallingford is 400,000 units, the a

Explain why thequantity purchased is used in computingthe direct materials price variance, but the actual quantity consumed is used in computingthe direct materials quantity variance. Why does an analogous question not arise in the context of the direct labor variance?

Apply the EOQ model to the following quantity discount situation in which D=500 units per year, C0=$40, and the annual holding cost rate is 20%. What orderquantity do you recommend?
Discount Category Order Size Discount (%) Unit Cost
1 0 to 99 0

Apply theeconomicorderquantityformula to the data in Example 2-2 and reproduce the answer of 2,828 units. Also, calculate the total annual cost incurred fortheeconomicorderquantity. Submit your solution.
EXAMPLE 2-2
Consider a hardware supply warehouse that is contractually obligated to deliver 1,000 units of a sp