Question

QUESTION 27 A local retailer purchased Inventory from an oversens supplier and believes the assumptions of the EOQ model are met reasonably well. Data from their accountant show annual demand (D) -6,588 units, ordering cost (S) - $42 per order, and holding cost 1) - $4 per unit per year How many times per year will she replenish her Inventory of this material for 'How many orders will she place in one year?') Demand 6,588 unit per year ordering cost $42 per order holding cost $4 per unit per year Excel Access

Answer 1

Annual Demand D = 6588

Ordering Cost S = 42

Holding Cost H = 4

EOQ = (2DS/H)^(1/2)

EOQ = (2*6588*42/4)^(1/2)

EOQ = 371.95 units

Number of Orders = D/EOQ

Number of Orders = 6588/371.95

Number of Orders = 17.71 orders

Number of Orders = 18 orders