(Comprehensive EOQ calculations) Knutson Products Inc. is involved in the production of airplane parts and has...

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(Comprehensive EOQ calculations) Knutson Products Inc. is involved in the production of airplane parts and has the following Given the foregoing information: a. Determine the optimal EOQ level. b. How many orders will be placed annually? c. What is t

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Answer 1

Answer #1

Solution:

Solving first foyr questions as HOMEWORKLIB's guidelines:

a)Calculation of EOQ

EOQ=SQRT[2*Annual demand*Cost per order/Carrying cost per unt]

=SQRT[2*400,000*$500/$50*25%]

=5656.85 units or 5657 units

b)Calculation of no. of orders

No. of orders=Annual dmand/EOQ

=400,000/5657

=70.71 or 72 orders

c)Calculation of inventory order point

Inventory order point=(Average weekly demand*Lead time in week)+Safety stock

=(400,000/50)*4+5000 units

=37000 units

d)Average level of inventory

=EOQ/2=5657 units/2

=2828.5 units

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Answer 2

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