Economic Order Quantity

Economic Order Quantity - EconomicOrderQuantity...

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Economic Order Quantity Nov. 13, 2008 Annual Demand = 50,000 spools Cost per Spool = $75.00 Cost to Place an order = $25.00 Annual Cost to Carry Inventory = 12% Arbitrary Decision: Order quarterly (every 3 months, 12,500) Arbitrary Decision If he orders quarterly (12,500), what is the annual costs? Cost of spools = 50,000 x $75 =  $3,750,000 Cost to order = 4 x $25 =                        100 Cost to Carry Inventory = 6250 x 0.12 x 75 = 56,250 $3,806,350 Avg. Inv. (12500 + 0)/2 = 6250
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This note was uploaded on 03/17/2011 for the course ADM 1300 taught by Professor Koppel during the Spring '08 term at University of Ottawa.

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Economic Order Quantity - EconomicOrderQuantity...

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