Question Help * Problem 12.9 a yin g cost is 40% of the $11 unit cost and that a

Question

Question Help * Problem 12.9 a yin g cost is 40% of the $11 unit cost and that annual demand Henry Crouch's law off e has traditionaly rdered ink e lls 55 units at a time. The firm estimates that is about 235 units per year. The assumptions of the basic EOQ model are thought to apply a) For what value of ordering cost would its action be optimal? ts action would be optimal given an ordering cost of sper order (round your response to two decimal places For what value of ordering cost would its action be optimal? action would be optimal given an ordering cost of $per order (round your response to two decimal

Explanation / Answer

EOQ = [ 2x demand x ordering cost / holding cost ]1/2

(55)2 = 2x 235 xOC / 11x0.4

or OC = 55x55x4.4 /2x235 = 28.31

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