Score: 3 of 24 pts 2 of 4 (3 complete) Hw Score: 38.75%, 31 of 80 pts Problem 12
ID: 362170 • Letter: S
Question
Score: 3 of 24 pts 2 of 4 (3 complete) Hw Score: 38.75%, 31 of 80 pts Problem 12.15 Question Help * Joe Henry's machine shop uses 2,460 brackets during the course of a year. These brackets are purchased from a supplier 90 miles away. The following information is known about the brackets: Annual demand Holding cost per bracket per year Order cost per order Lead time Working days per year 2.460 $1.35 $18.50 2 days 250 a) What is the E00? 259.67 units (round your response to two decimal places). b)What is the average inventory the EOQ is used? 130 units (round your response to two decimal places) What would be the annual inventory holding cost? $ 175.5(round your response to two decimal places).Explanation / Answer
Economic order Quantity ( EOQ ) will be defined as :
EOQ = Square root ( 2 x Co x D/Ch)
Where,
D = Annual demand = 2460
Co= Order cost per order = $18.50
Ch = Holding cost per bracket per year = $1.35
Therefore ,
EOQ = Square root ( 2 x 18.50 x 2460/1.35)
= 259.66 ( rounded to 2 decimal points)
Average inventory = EOQ/ 2 = 259.66/2 = 129.83
Annual Inventory holding cost
= Holding cost per bracket per year ( Ch) x Average Inventory
= Ch x EOQ / 2
= 1.35 x 129.83/ 2
= $ 87.63
EOQ = 259.66
AVERAGE INVENTORY = 129.83
ANNUAL INVENTORY HOLDING COST = $87.63
EOQ = 259.66
AVERAGE INVENTORY = 129.83
ANNUAL INVENTORY HOLDING COST = $87.63
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