Question

3 onts An large auto repair shop has been purchasing windshields for the cars at the rate of 250 windshields per order. The fem estimates that carrying for holding cost is 120 per year, and that ordering coulis hou 1251 order. The current price of each windshield is $200. The assumptions of the basic EQ model apply for what annual demand (D) is the currection optimal? units per order holding cost order cost product cost 250 units 520 per unit per year 5251 per order $200 per unit

Answer 1

We have to determine annual demand.

EOQ = 250 units

Holding cost = $20

Order cost = $251

We need to determine D

EOQ = square root of 2×D×S/H

250 = sqrt of 2×D×251/20

Squaring off

62500 = 2×D×251/20

D= 62500×20/(2×251) = 2490.03 ~ 2490

for 2490 of annual demand ,this is an optimal order quantity.