determine the EOQ when the annual demand is 250000 the carrying cost her unit is 30...
determine the EOQ when the annual demand is 250000 the
carrying cost her unit is 30 and ordering cost 750.if the warehouse
constrain can only hold 7500 units.if the order is constrained by
this what is the annual cost
Homework Answers
EOQ = Square root ((2xAnnual demand in Units x ordering cost) /Carrying cost per unit)
= Square root ((2x250000x750)/30)
= Square root (12,500,000)
= 3536 units
Number of order to be placed in a year = 250,000/3536 = 70.72 ~71 orders
Average inventory = 3536/2 = 1768
Annual Carrying cost =(1768*30) =53,040
Total ordering cost =71*750 =53,250
Total annual cost= $106,290
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