Assuming the price is $15, annual demand D is 750 units, ordering cost is $60, a

Question

Assuming the price is $15, annual demand D is 750 units, ordering cost is $60, and the annual inventory holding cost percentage is 20%. What order quantity do you recommend Apply the EOQ model to the quantity discount situation shown in the following table 173 250 183 750 43 41 Which of the following is an assumption of the basic EOQ model Lead time is unknown. Demand is shown and constant. Orders can arrive in partial shipments. Backorders are allowed When is production order Quantity (POQ) equivalent to Economic Order p = d p = h p = o p = l p = infinity

Explanation / Answer

8) EOQ = Sqrt(2*ordering cost*annual demand)/Inventory carrying cost per unit per annum EOQ= Sqrt( 2*750*60/(13.5*20%)) = 183 Therefore the EOQ = 183 9) Quantity of the discounts are available 10) Production order quantity is equivalent to EOQ when p=h

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