a mathxl.com Da Homework-Noura AlAl Moura Auu, 3/14/16 12:08 AM Homework: Chapte
ID: 348322 • Letter: A
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a mathxl.com Da Homework-Noura AlAl Moura Auu, 3/14/16 12:08 AM Homework: Chapter 12 1 HW Score: 66.87%, 2 of 3 p 2of 3 R complete) Soore: 0 of 1 pt Question Help Problem 12.8 Thomas Kratcer is the purchasing manager for the headquarters of a targe insurance company chain with a invernann ss S29 per order takes about 5 days for an order to arrive. and the demand for 1 week is 1 19 units. (This is a corporate operator, and there aro 250 working cantral inventory operation. Thorrias's festenst onig has a demand of 5,950 units per year. The cost of each unit is $101, and the inventory carrying cost is $8 per unit per year The average ordering )What i the EOO? 2077 units (round your response to two decimal places) places). 0) What is the average inventory it the EOQ is used? 103.85 units c) what is the optimal dj What is the optimal number of orders per year? 28.6 orders (round your response to two decimal places). number of days in between any two orders? 8.74 days (round your response to two decimal places) e) What is the annual cost of ordering and holding inventory? S per year (round your response to two decimal placesExplanation / Answer
Annual demand (D) = 5950 units
Ordering cost (S) = $29 per order
Holding cost (H) = $8 per unit per year
Number of days per year = 250 days
a) Economic order quantity (Q) = sqrt of (2DS / H)
= sqrt of [(2 x 5950 x 29)/8]
= sqrt of 43137.5
= 207.70 units
b) Average inventory if EOQ is used = Q/2 = 207.70/2 = 103.85
C) Number of orders per year = D/Q = 5950/207.70 = 28.65 orders
d) Number of days between orders = (Q/D)Number of days per year
= (207.70/5950)250
= 8.73 days
e) Annual holding cost = (Q/2)H = (207.70/2)8 = $830.8
Annual Ordering cost = (D/Q) S = (5950/207.70)29 = $830.77
Annual cost of ordering and holding inventory = Ordering cost + Holding cost = $830.8+$830.77 = $1661.57
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