Question

Quest Question 1 Given the following data: D = 60.825 units per year. S=5120 persetup. P = 55 per unit and I25% per year, EOQ 3.113 units Calculate annual costs of holding and setup following EOQ behavior 3 points annual demand setup cost product price holding cost as to of price current order quantity Excel ACES 60.325 units per year 5120 per setup 55 per unit 25 3.113 units per order

Answer 1

Question: For the given data, calculate annual costs of holding and setup following EOQ behavior.

Answer:

Given that:

Annual Demand (D) = 60825

Setup cost (S) = 120

Unit Cost (P) = 5

Holding Cost (H) = 25% x 5 = 1.25

Current Order (EOQ) = 3113

Annual Setup Cost (ASC) is given by:

ASC = (D / EOQ) x S

Therefore:

ASC = (60825 / 3113) x 120

ASC = 2344.68358497

ASC = 2344.68

Annual Holding Cost is given by:

AHC = (EOQ / 2) x H

Therefore:

AHC = (3113 / 2) x 1.25

AHC = 1945.625

AHC = 1945.63

Total Annual Cost is given by:

Total Annual Cost of Holding and Setup = ASC + AHC

Therefore:

Total Annual Cost of Holding and Setup = 2344.68 + 1945.63

Total Annual Cost of Holding and Setup = 4290.31