The Economic Order Quantity (EOQ) model is a classical model used for controlling inventory and satisfying demand. Costs included in the model are holding cost per unit, ordering cost and the cost of goods ordered. The assumptions for that model are that only a single item is considered, that the entire quantity ordered arrives at one time, that the demand for the item is constant over time, and that no shortages are allowed.

In the objective function, the first term is the annual cost of goods, the second is the annual ordering cost (Dj/Qjis the number of orders), and the last term is the annual inventory holding cost (Qj/2 is the average amount of inventory).

Set up a spreadsheet model for the following data:

Item 1 Item 2 Item 3

An D. 3000 3000 3000

It Ct 90 50 70

Or Ct 150 135 125

Sp Re 50 25 40

w= 5000

i = 0.3

Solve the problem using Excel Solver. Hint: You will need to start with decision variable values that are greater than 0 for Solver to find a solution.

If required, round your answers to two decimal places.

Optimal Solution

Q1__________

Q2__________

Q3___________

If required, round your answer to the nearest dollar. Do not round intermediate calculations.

Total Cost: $___________