Calculating Economic Order Quantity
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A auto company has been ordering parts of its production process in lots of 10,000 units. Each order ciss the firm $50 to place. Holding cost per unit is $3. the auto company uses 200,000 units every 250 days.
A. Calculate the EOQ
B. What is the difference in inventory costs between the EOQ and the current order company
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D=Annual Demand = 200000 units (assume that there are 250 working days in a year)
Ch=Annual Carrying Cost = 3 per unit
Co=Order Cost = $50 per order
Now, EOQ = (2*D*Co/Ch)^0.5 = ...
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