Respuesta :
To maximize daily profits, the company must implement the EOQ model in its manufacturing process. This model suggests that an ideal order quantity must be purchased to keep inventory costs minimum and thus aim to maximize the daily profits made by the company. This ideal quantity is the optimal order quantity and usually is termed Economic Order Quantity (EOQ).
The formula for calculating EOQ:
EOQ (Q) =[tex](2*D*S/H)^{0.5}[/tex]
where:
S= Ordering cost
D= Annual demand
H= Holding cost
EOQ applies most effectively when demand for a product is consistent over the yr and each new order is introduced in full whilst inventory reaches 0. there may be a hard and fast cost for every order positioned, regardless of the wide variety of units ordered; an order is assumed to contain the handiest 1 unit. there may be also a price for each unit held in storage, commonly called maintaining fee, every so often expressed as a percent of the purchase value of the object. while the EOQ formula is simple there are elements consisting of transportation fees and quantity discounts to don't forget in actual utility.
We need to decide the best quantity of gadgets to reserve so that we decrease the whole fee associated with the purchase, transport, and garage of the product.
The desired parameters to the solution are the total demand for the year, the acquisition cost for every item, the constant price to locate the order for a single item, and the storage cost for each item in keeping with 12 months. the word that the wide variety of instances an order is located may also influence the full value, though this quantity can be determined from the alternative parameters.
To learn more about EOQ visit here:
brainly.com/question/28012420
#SPJ4
