Answer: SEE EXPLANATION
A. 198.27 UNITS
B. 99.14 UNITS
C. 30.76 ORDERS
D. 8.12 DAYS
E. $1,784.43
Explanation:
Given the following ;
Annual order = 6,100
Carrying cost = $9 per unit per year
Ordering cost = $29
A) EOQ =sqrt[( 2 × Annual order × (ordering cost ÷ carrying cost)]
EOQ = sqrt[2 ×6100 × (29÷9)]
EOQ = sqrt(12200 × 3.22222222)
EOQ = 198.27 units
B.) AVERAGE INVENTORY :
EOQ ÷ 2
198.27 ÷ 2 = 99.14 UNITS
C.) Optimal number of orders per year:
Demand / order per year
6,100 ÷ 198.27 = 30.76 orders
D.) Optimal number of days between two orders:
Number of working days ÷ optimal number of orders
250 ÷ 30.76 = 8.12 days.
E.) Annual cost of ordering and holding inventory:
$198.27 × $9 = $1,784.43