A company sells apples. Annual demand is 20,000, the order cost is $150.00 and the holding cost is 20% of the cost of each item. Cost of each item is $80.00.

Calculate:

a. The economic order quantity EOQ) [4 marks]

b(i) the annual order cost [ 2 marks]

ii) the annual holding cost [ 2 marks]

iii ) total annual cost including cost of items. [2 marks]

EOQ = Q= 2DC_o C_h Total inventory cost Q/2 C_h + D/QC_o