Homework: Homework #7 Score: 0 of 1 pt Problem 12.11 Save 11 of 15 (10 complete)
ID: 422195 • Letter: H
Question
Homework: Homework #7 Score: 0 of 1 pt Problem 12.11 Save 11 of 15 (10 complete)> Hw score: 64.85%, 9.73 of 15 pts Question Help Southeastern Bell stocks a certain switch connector at its central warehouse for supplying field service offices. The yearly demand for these connectors is 14,700 units. Southeastern estimates its annual holding cost for this item to be $23 per unit. The cost to place and process an order from the supplier is $78. The company operates 300 days per year, and the lead time to receive an order from the supplier is 3 working days. a) What is the economic order quantity? units round your response to the nearest who urn erExplanation / Answer
Given values:
Annual demand, D = 14,700 units
Annual holding cost, H = $23 per unit
Ordering cost, Co = $78
Number of working days = 300 days per year
Lead time = 3 working days
Solution:
Economic ordering quantity (EOQ) is calculated as;
EOQ = SQRT [(2 x D x Co) / H]
where,
D = Annual demand
Co = Ordering cost
H = Annual holding cost
Putting the given values in the above formula, we get;
EOQ = SQRT [(2 x 14700 x 78) / 23]
EOQ = 315.76 or 316 (Rounding off to the nearest whole number)
Economic order quantity = 316 units
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.