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

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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

#### 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 = ...

#### Solution Summary

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

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