Question

product has a demand of 10,000 units per year. Ordering cost is RO 60, and holding cost is RO 4 per unit per year. The EOQ model is appropriate. The cost-minimizing solution for this product will cost per year in total annual nventory (holding and setup) costs. Round-up to the nearest Integer Select one: a. RO1200 b. Zero; this is a class C item. c. RO 2191 d. RO 800 Next page

Answer 1

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The answer is based on the economic order quantity (EOQ) and i have solved it in a better way and explained it well .

Given Data, Demand = 10,000 units /year ordering Cost = 60/unit Holding cost 4/unit The formula of EOQ is : EOQ stands for Economic Order Quantity EOQ = 2xDXS H D = Demand s= Cost per order H= Holding Cost - 2x 10,000 x 60 4 3ooooo = 548 Therefore, the nearest integer is 800. Answer is (1) Ro 800.

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