If EOQ = 360 units, order costs are $5 per order, and carrying costs are $0.20...

If EOQ = 360 units, order costs are $5 per order, and carrying costs are $0.20 per unit, what is the usage in units? How many orders will be placed in a year if there are 250 working days per year and lead time is 5 days?

Expert Solution

1)

EOQ = 360 units

S = Ordering cost = $5 per order

H = Holding or carrying cost per unit per year: $0.20 per unit

d = daily demand/ usage rate = ?

2*d*5/0.2

EOQ = squre root of 50d

360 * 360 = 50d

360*360/50 = d

d = 2592 units

2) Number of orders = D/Working Days in a year = 2592/250 = 10.37 or 10 orders

Rahul Sunny answered 2 years ago

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