Redan Manufacturing uses 3,100 switch assemblies per week and then reorders anot

Question

Redan Manufacturing uses 3,100 switch assemblies per week and then reorders another 3,100. The relevant carrying cost per switch assembly is $13.00, and the fixed order cost is $1,550.

Calculate the economic order quantity. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Redan Manufacturing uses 3,100 switch assemblies per week and then reorders another 3,100. The relevant carrying cost per switch assembly is $13.00, and the fixed order cost is $1,550.

Explanation / Answer

carrying cost = 3100/2 * 13 = 20150

ordering cost = D * S/Q = 3100 * 1550 / 3100 = 1550

EOQ = sqrt(2 * D * S /H) = sqrt( 2 * 3100 * 1550 / 13) = 859.785 = 860

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