Formulas: Solution: 0* = TCC = TOC = TIC = ROP = units Total Inventory Cost = TIC Total Order Cost = TOC Total Carry Cost = TOC Fixed Order Cost = FOC = $9.00 Annual Demand (Units) = U = 48,000 Whole Sale Purchase Price (or Unit Cost) = PP = $3.00 Annual Carry Cost (% of PP) = CC = 20% TOC = FOC * U/Q TCC =(Q/2)* CC * PP Order Quantity = Q TIC = TOC + TCC = (FOC * (U/Q) + ((U/2)* CC * PP) Cost Minimizing Q = SQRT((FOC * U* 2)/(CC * PP)) = Q* note: this is derives by setting the first derivitive of TIC to 0. Reorder Point = (U/365) * Q = LT = 7 days EOQ 1 1 1 TOC TCC Input Data 1 -TIC Solution $ 1 0 Annual Unit = U Purchase Price = PP Fixed Order Cost = FOC Carry Cost = CC Order Lead Time (in days) = LT $ $ 48,000 3.00 9.00 20% 7.00 0 0 Objective: 0 Find the order quantity that minimizes the total cost of managing inventory o o o o o q Input Clear it New Problem Fit to screen