# fm28 7 - = 0.2(\$200(500/2 \$1,000(5,000/500 = \$40(250...

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Now, solving for Q, we obtain: . ) P )( C ( ) S )( F ( 2 EOQ Q ) P )( C ( ) S )( F ( 2 Q Q ) S )( F ( 2 ) P )( C ( 2 2 = = = = d. What is the EOQ for custom microchips? What are total inventory costs if the EOQ is ordered? Answer: EOQ = ) P )( C ( ) S )( F ( 2 = ) 200 (\$ 2 . 0 ) 000 , 5 )( 000 , 1 (\$ 2 = 000 , 250 = 500 units. When 500 units are ordered each time an order is placed, total inventory costs equal \$20,000: TIC = CP(Q/2) + F(S/Q)
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Unformatted text preview: = 0.2(\$200)(500/2) + \$1,000(5,000/500) = \$40(250) + \$1,000(10) = \$10,000 + \$10,000 = \$20,000. Note that the average inventory of custom microchips is 250 units, and that 10 orders are placed per year. Also, at the EOQ level, total carrying costs equal total ordering costs. Mini Case: 28 - 7...
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## This note was uploaded on 07/13/2011 for the course FIN 4414 taught by Professor Staff during the Spring '08 term at University of Florida.

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