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# A12 - 15.50 Economic order quantity Annual cost of ordering...

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15.50 Economic order quantity a. Annual cost of ordering and storing XL-20 = + unit per cost holding annual 2 quantity order order per cost quantity order t requiremen annual b. Economic order quantity = unit per cost holding annual order per t)(cost requiremen (2)(annual = \$4 (\$150 (2)(4,800) = 360,00 = 600 c. Using the formula given for requirement (1): Total annual cost of ordering and storing XL- 20 = ( 29 ( 29 \$4 2 600 \$150 600 4,800 + = \$2,400 Note that this cost does not include the actual cost of XL-20 purchases (i.e., the quantity purchased multiplied by the price). d. Orders per year: Number of orders per year = 8 600 4,800 quantity order t requiremen annual = = e. Using the new cost data: (1 ) EO Q = unit per cost holding annual order per (cost t) requiremen (annual (2) = \$19.20 (\$20 (2)(4,800) = 10,00 = 100

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15.50 (continued) (2 ) Number of orders per year = 100 4,800 quantity order t requiremen annual = = 48 15.51 Inventory ordering and holding costs a.
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