EOQ-Spring 2019.docx - EOQ Question 1 b-The following...

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EOQQuestion 1: b-The following represent four independent situations from which one amount is missing.ProductsAnnual QuantityCarrying (Holding) Cost/UnitOrdering Cost/OrderEOQBeta4,500$1$?300Alpha?$30$1080Zod3,600$0.12$6?Sima3,500$?$5125Required:1-Calculate the missing figures for each of the cases.2-Calculate the number of orders that will be placed each year.3-Give examples of costs included in annual carrying (holding) costs of stock when using the EOQ decision model. 4-Prepare a graph for case C.5-Currently the company purchases product C for $5 per unit. The company has been offered a 1 per cent discount on the cost of product C if it places orders in quantities of 1,200. Discuss whether the company should accept the discount and place larger orders. Show your workings. Solution:
Alpha: 80 =6400= 20D / 30 20D= 192,000D= 9,600 units Zod: EOQ= = 600 unitsSima: 125= 15,625= 35,000 / HH= $2.24 CaseAnnual QuantityCarrying(Holding)Cost/UnitOrderingCost/OrderEOQA4,500$1$10 300B9,600$30$1080C3,600$0.12$6600D3,500$2.24$51252-Compute the number of orders: CaseAnnual Quantity(1)EOQ(2)No. of Orders(3) = (1)/(2)A4,50030015B9,60080120C3,6006006D3,50012528(2 × D × 10) ÷ 30(2 × 3,600 × 6) ÷ 0.12 (2 × 3,500 × 5) ÷ holding cost
Question 2:Company X uses 60,000 of component A. The company estimates the cost of placing an order at $30 per order. Its annual holding cost is 15% of the purchase price of $6 per unit.Required:1. Calculate the EOQEOQ = SQRT (2DC\H)
2. Calculate the ordering cost and the holding cost in case the company decided to use the EOQOrdering cost
Question 3:Prestige Bears Ltd carries a wide assortment of luxury teddy bears for its customers. One item, KPS isvery popular. In order to keep its stock under control, a decision is taken by management to order onlythe optimum economic quantity, for this item, each time. You have the following information.

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