Explore BrainMass

Explore BrainMass

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

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    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

    © BrainMass Inc. brainmass.com March 4, 2021, 6:25 pm ad1c9bdddf
    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.

    $2.49

    ADVERTISEMENT