2. Calculate the economic quantity (EOQ) 3. Use the formula given in item #3 and

Question

2. Calculate the economic quantity (EOQ) 3. Use the formula given in item #3 and the information provided in item #4 of the handout and calculate the optimum number of cases necessary for each order. 4. Show your calculations on the sheet. The square root sign covers both the numerator and the denominator. 5. Answer the following question: since this calculation is not always useful, particularly with the new technologies currently in use explain what type of inventory control system would not find the EOQ of much use?

Explanation / Answer

Solution :

EOQ = Sqrt ( 2 * Units Sold * Ordering Costs / Unit Cost * Inventory Cost )

EOQ = Sqrt (2*6000*60/(0.24*12)) = 500nos

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