An item has an average demand of 30 units per month with an ordering cost of $30

Question

An item has an average demand of 30 units per month with an ordering cost of $30/order. The

inventory carrying cost is $2.00/unit/month. No safety stock is carried.

a. Calculate the economic order quantity.

b. What is the average cycle stock inventory using your answer to part a?

c. What are the total inventory holding and ordering costs for the year?

An item has an average demand of 30 units per month with an ordering cost of $30/order. The inventory carrying cost is $2.00/unit/month. No safety stock is carried. Calculate the economic order quantity. What is the average cycle stock inventory using your answer to part a? What are the total inventory holding and ordering costs for the year?

Explanation / Answer

1Ans:

EOQ = SQRT(2

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