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In: Operations Management

Given the following data, what is the EOQ? TC? No of orders per year, demand/month= 1300...

Given the following data, what is the EOQ? TC? No of orders per year, demand/month= 1300 units, ordering cost=$46, holding cost=$4.50/unit/year

Solutions

Expert Solution

EOQ = SQRT(2 * DEMAND * ORDERING COST / HOLDING COST)

ANNUAL HOLDING COST = (EOQ / 2) * HOLDING COST

ANNUAL ORDERING COST = (DEMAND / EOQ) * ORDERING COST

EXPECTED NUMBER OF ORDERS = DEMAND / Q

A. EOQ = SQRT(2 * 1300 * 46 / 4.5) = 163.03

B. ANNUAL HOLDING COST = (163.03 / 2) * 4.5 = 366.82

ANNUAL ORDERING COST = (1300 / 163.03) * 46 = 366.8

TOTAL COST = AHC + AOC = 366.82 + 366.8 = 733.62

C. NUMBER OF ORDERS = 1300 / 163.0 3 = 7.97

keosha answered 2 years ago
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