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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

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    Solution Preview

    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.