(EOQ model) Suppose your company has carrying costs for a particular inventory item of $0.75 per...
- (EOQ model) Suppose your company has carrying costs for a particular inventory item of $0.75 per unit per year. Annual sales of this item are 46,800 units. The fixed order costs are $50 per order. Using the EOQ model, what is the optimal order quantity each time?
Homework Answers
Optimal order quantity as per EOQ Model = (2*Annual Demand*Cost per order/Carrying cost per unit per year)^1/2
= (2*46,800*50/0.75)^1/2
= 2,497.999 units
i.e. 2,498 units
Hence, optimal order quantity = 2,498 units
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(EOQ model) Suppose your company has carrying
costs for a particular inventory item of $0.75 per...
The economic order quantity (EOQ) model is a classical model used for controlling inventory and s...
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 arc allowed. Suppose we relax the first assumption and...
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