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    Calculating optimal inventory parameters

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    Annual demand is 4000 units the cost is $90, the inventory carrying cost is 10% of each unit. The average ordering cost is $25. Demand per week is 80

    What is the EOQ? What is the ROP?

    What is the average inventory, what is the annual holding cost?

    How many orders per year would be placed, what is the annual ordering cost?

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    Solution Preview

    What is the EOQ? What is the ROP?

    D =Total demand= 4000 units per year
    S = ordering cost=$25 per order
    H = holding costs=90*10%=$9 per unit per year
    P = Item purchase price = $90 per unit ...

    Solution Summary

    Solution describes the steps to calculate EOQ, ROP, average inventory and inventory costs.

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