If the annual demand for a specific product is 17,000, the order quantity is 850

Question

If the annual demand for a specific product is 17,000, the order quantity is 850, the annual holding costs is 7.00 per unit, and the ordering cost per order is is 150, what is Economic Order Quantity? Round to the nearest whole number (e.g. 234.3845 would be "234").

If the annual demand is 11,500, the order quantity is 800, the annual holding costs is 6.00 per unit, and the ordering cost per order is is 175, what is the total of carrying and ordering costs? Round to the nearest penny and do not show any sign (e.g. $234.3845 would be "234.38").

Explanation / Answer

EOQ = SQUARE ROOT OF (2*ANNUAL DEMAND*ORDERING COST/HOLDING COST)

=SQUARE ROOT OF (2*17000*150/7)

= 853.563 OR 854 UNITS

EOQ =SQUARE ROOT OF (2*11500*175/6)= 819 UNITS

TOTAL(ORDERING + HOLDING) COST= 11500/819*175 + 819/2*6

=2457.26 + 2457

=4914.26 OR $ 4914

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.