Question

Bases Fort Able Base Baker Camp Charlie Camp Delta X,Y) Coordinates Tonnage 30,000 60,000 35,000 75,000 (40,110 (70,50) (90,20) (70,80) D. A product has demand of 4000 units per year. Ordering cost is $20 and holding cost is $4 per unit per year. Calculate the EOQ and the number of times the order must be placed to meet the demand.

Answer 1

Consider the inventory details given for the company. Holding cost, H = $4 ordering cost, S = $20 Annual demand, D = 4,000 units EOQ = squareroot 20s/H = squareroot 2 times 4,000 times $20/$4 = squareroot 40,000 EOQ = 200 units No. of orders = D/EOQ = 4,000/200 = 20 orders Annual ordering cost = D/Q S = 4000/20 times $20 = $400 Annual holding cost = Q/2 times H = 200/2 times $4 = $400 Total cost = Annual holding cost + Annual ordering cost = Q/2 H + D/Q S = $400 + $400 TC = $800