Question
It is estimated that we have an estimated annual demand of 24,000 units during the year. We can purchase these units from a factory for
It is estimated that we have an estimated annual demand of 24,000 units during the year. We can purchase these units from a factory for $10 each. Holding costs are estimated to be $1.25. Cost of purchasing is estimated to be $100.00. Orders require a lead time of 2 working days, and we work 365 days per year. Given the information above, what would be the EOQ? Note: Round your EOQ value to the nearest whole number (no decimals) in column E; use the rounded number in any of the subsequent formulas. Using the rounded EOQ value, calculate the following (your answers are to be rounded to 2 decimal places): a) average inventory b) number of orders to be placed per year c) the reorder point d) annual setup and holding costs e) total cost for managing the inventory
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