Joe Henry\'s machine shop uses 2,460 brackets during the course of a year. These

Question

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$1.35 Order cost per order Lead time Working days per year 2,460 $18.50 2 days 250 a) What is the EOQ? 259.67 units (round your response to two decimal places). b)What is the average inventory ithe EOQ is used? 12983 units (round your response to two decimal places) What would be the annual inventory holding cost? s 175.27 (round your response to two decimal places). c)Given the EOQ, how many orders will be made annually? 9.47 orders (round your response to two decimal places). What would be the annual order cost? $ 175.26(round your response to two decimal places). daven the EOQ, what is the total annual cost of managing (ordering and holding) the inventory? S round your response to two decimal places

Explanation / Answer

Demand (D) = 2460

Holding cost (H) = 1.35

Ordering cost (S) = 18.5

a) EOQ = sqrt(2*D*S/H) = sqrt(2*2460*18.5/1.35) = 259.66

b) Average inventory = EOQ/2 = 259.66/2 = 129.83

Holding cost = EOQ/2*H = 259.66/2*1.35 = 175.27

c) Number of orders = D/EOQ = 2460/259.66 = 9.47

Ordering cost = D/EOQ*S = 2460/259.66*18.5 = 175.27

d) Total cost = Ordering cost + Holding cost = 175.27 + 175.27 = 350.54

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