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    Economic Order Quantity for a Product

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    A large distributor of oil-well drilling equipment operated over the past 2 years with EOQ policies bases on an annual holding cost rate of 22%. under the EOQ policy, a particular product has been ordered with a Q*=80. A recent eval of holding costs shows that because of an increase in the interest rate associated with bank loans, the annual holding cost should be 27%.

    a. what is the new economic order quantity for the product?
    b. develop a general expression showing how the economic order quantity changes when annual holding cost rate is changed from I to I'.

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    A large distributor of oil-well drilling equipment operated over the past 2 years with EOQ policies bases on an annual holding cost rate ...

    Solution Summary

    Economic order quantity for a product is determined for oil-well drilling equipment.

    $2.19

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