The material AB is used uniformly throughout the year. The data about annual requirement, ordering cost and holding cost of this material is given below:

Annual requirement: 2,400 units

Ordering cost: $10 per order

Holding cost: $0.30 per unit

Required:

a. Determine the economic order quantity (EOQ) of material AB using above data. (2 marks)

b. The ordering cost (1 mark)

c. The holding cost (1 mark)

d. Total inventory management cost (1 mark)

e. Prove that the economic order quantity calculated gives the least total inventory management cost if the following are the number of units per order:

Number of orders Number of units per order

1 2,400

2 1,200

3 800

4 600

5 480

6 400

7 343

8 300

QUESTION 6 The material AB is used uniformly throughout the year. The data about annual requirement, ordering cost and holding cost of this material is given below: Annual requirement: 2,400 units Ordering cost: $10 per order Holding cost: S0.30 per unit Required: a. Determine the economie order quantity (EOC) of material AB using above data. (2 marks) b. The ordering cost (1 mark) e. The holding cost (1 mark) d. Total inventory management cost (1 mark) Prove that the economic order quantity calculated gives the least total inventory management cost if the following are the number of units per order: Number of Number of units per order orders 1 2 3 4 5 6 7 8 2.400 1.200 800 600 480 400 343 300 (7 marks)