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

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

https://brainmass.com/business/inventory-management/economic-order-quantity-cycle-time-annual-ordering-cost-44281

#### 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.