Question 11 The materials manager for a billiard ball maker places orders for re
ID: 361568 • Letter: Q
Question
Question 11
The materials manager for a billiard ball maker places orders for resin, one of the raw materials used in producing billiard balls. She knows that demand for resin is 50 kilograms each day, and that it costs $14.60 per year to carry a kilogram of resin in inventory. She also knows that the order costs for resin are $100 per order, and that the lead time for delivery is four (4) days. Assume 365 days in a year.
What is the economic order quantity (EOQ) for resin?
50 kilograms
100 kilograms
200 kilograms
500 kilograms
50 kilograms
100 kilograms
200 kilograms
500 kilograms
Explanation / Answer
Option D: Answer 500 kilograms
Demand rate= 50 kilograms each day
Annual demand = 50*365= 18,250 kilograms
EOQ formula = square root of [(2 x demand x ordering costs) ÷ carrying costs]
= square root of [(2*18250*100) ÷14.60]
= square root of [(3650000) ÷14.60]
= square root of [25000]
= 500
So the economic order quantity (EOQ) for resin is 500 kilograms
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.