Question
In: Operations Management
Thomas Kratzer is the purchasing manager for the headquarters of a large insurance company chain with...
Thomas Kratzer is the purchasing manager for the headquarters of a large insurance company chain with a central inventory operation. Thomas's fastest-moving inventory item has a demand of 5,900 units per year. The cost of each unit is $101, and the inventory carrying cost is $11 per unit per year. The average ordering cost is $29 per order. It takes about 5 days for an order to arrive, and the demand for 1 week is 118 units. (This is a corporate operation, and there are 250 working days per year).a) What is the EOQ? _____ units (round your response to two decimal places).
Solutions
Expert Solution
a)
Annual demand = 5900 = D
EOQ = Square root ((2*D*S)/h) S = ordering cost per order = $29 and
h = holding cost = $11
EOQ = Sqrt((2*5900*29)/11) = 176.3776939 = 176.38 (Rounded to 2
decimal places)
keosha answered 1 year agoRelated Solutions
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