Purchase Solution

Inventory Model Problem : Economic Order Quantity, Cycle Time and Annual Ordering Cost

Not what you're looking for?

Ask Custom Question

A company buys calculators at a price of $5 per unit. The holding cost of each calculator is $.75. The demand for the calculator is 20,000. The cost of ordering is $25.00.

I need to determine the EOQ, cycle time, and annual ordering cost. Can you please show me the right equations to use, then space down four or five lines so I can cover up your answers and work the problems myself. That way I can compare my answers to yours to see if I'm doing it right.

Again, the three calculations I need to do are:
1- Determine the EOQ
2- Determine the Cycle Time
3- Determine the annual ordering cost

Purchase this Solution
Solution Summary

Economic Order Quantity, Cycle Time and Annual Ordering Cost are investigated. The solution is detailed and well presented.

Solution Preview

Solution:
1)
Given: unit price of calculator: $5
Holding cost = $0.75
Demand = 20,000 calculators.
Ordering cost = $25.00
We have to compute EOQ, cycle time, and annual ordering cost:
1) EOQ =
Where D = 20,000 (annual demand)
C0 = ordering cost = ...

Purchase this Solution
Free BrainMass Quizzes
Business Processes

This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.

Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.

Paradigms and Frameworks of Management Research

This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.

Social Media: Pinterest

This quiz introduces basic concepts of Pinterest social media

Writing Business Plans

This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.

View More Free Quizzes
Related BrainMass Solutions

  • Quantitative Methods: Inventory Model

    The lead time is three weeks, and the purchase price is $0.60. The solution finds answers to following using an Inventory Model in Excel. a. What is the economic order quantity for this item? b. What is the length of the order cycle? c.

  • Cash Cycles: Audi

    EOQ and Cash Cycles EOQ: An online source noted that economic order quantity (EOQ) is computed using the formula: EOQ = √ (2ACp / Ch) Where A = demand for the year Cp = cost to place a single order Ch = cost to hold one unit of inventory

  • Inventory Policy

    Ordering costs are $20 per order and holding costs are 25% of the value of the inventory. R&B has 250 working days per year, and the lead time is 5 days. Identify the following aspects of the inventory policy. a. Economic order quantity b.

  • Economic Order Quantity (EOQ), Ordering Costs, and Average Cycle Stock

    491163 Economic Order Quantity (EOQ), Ordering Costs, and Average Cycle Stock Monthly demand for an inventory item currently averages 160 units. The annual carrying cost is $10 per unit. Ordering cost is $60 per order.

  • Magyar Golf Supplies

    221688 Economic Order Quantity and Average Cycle Stock Michael Traci, the very new inventory manager at Magyar Gold Supplies, is considering using the economic order quantity for controlling inventory.

  • Calculating Production Runs

    Ordering cost, C2=$82 per order Economic order quantity = EOQ for LRM = = 392.11 units EOQ for LRM= 392.11 units To calculate the Optimal ordering cost, we need number of orders/year Number of orders/year for EOQ= = 38.25 orders/year Annual

  • Economic Order Quantity Model

    Given the following information: Demand per year r = 35000 yards per year Ordering cost C3 = $500 / order Carrying cost C1 = $0.35 /yard/year Economic Order Quantity = EOQ = Square Root (2 C3 r/C1) = 10,000 yards Minimum total annual inventory cost

  • Generating 95% Confidence Intervals

    per unit, lead time for a new order, ordering cost per order and average holding cost per unit per year remain the same as stated in the scenario for the current ordering model.

  • Risk in the Production Cycle

    The formula is: EOQ = SQRT of (2SO)/C Where: EOQ is economic order quantity S is the annual inventory requirement O is cost per order transaction C is carrying cost per unit. 2.

  • Calculating the EOQ and various inventory costs

    At the economic order quantity level, how many times will orders be placed? 7. At the economic order quantity level, what is the time between orders? 8. At the economic order quantity level, what will be the annual total ordering cost? 9.

View More Related Solutions