joe henrys machines uses 2530 brackets during the courses of year. these bracket
ID: 363439 • Letter: J
Question
joe henrys machines uses 2530 brackets during the courses of year. these brackets are purchased from supplier 90 miles away the following information is known about the brackets
Annual demand 2530
holding cost per bracket per year $1.65
ordering cost per order $ 18.50
lead time 2 days
working per day per year 250
A what is the EOQ
B what is the average inventory if the EOQ is used what would be the annual inventory holding cost
Average inventory =
C Given the EOQ how many orders would be made each year what be the annual order cost
D Given the EOQ what is the total annual cost of managing ( ordering an holding)
Explanation / Answer
D = 2530
Holding cost (H) = 1.65
Ordering cost (S) = 18.5
Lead time (LT) = 2 days
Working days (WD) = 250
a) EOQ = sqrt(2*D*S/H) = sqrt(2*2530*18.5/1.65) = 238 units
b) Average inventory = EOQ/2 = 119 units
Holding cost = EOQ/2*H = 238/2*1.65 = 196.35
c) Number of orders = D/EOQ = 2530/238 = 10.63
Ordering cost = D/EOQ*S = 2530/238*18.5 = 196.66
d) Total cost = Holding cost + Ordering cost = 196.35 + 196.66 = 393.01
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