Unit 12 Homework 12.13 - Annual order cost = 10 $18.75 =...

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Homework 12.13 a) EOQ = √((2(2500) x 18.75)/$1.50) = √(93,750/$1.50) = √(62,500) = 250 units The economic order quantity is 250 units. b) Average inventory = 250 / 2 = 125 units Annual inventory holding cost = 125 * $1.5 = $187.50 c) Number of orders per year = 2,500 / 250 = 10 orders per year
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Unformatted text preview: Annual order cost = 10 * $18.75 = $187.50 d) Total annual cost of managing inventory = $187.50 +$187.50 = $375 per year e) Time between orders = 250 / 10 = 25 days f) Reorder point = 10 * 2 = 20 units...
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