If D = 8,400 per month, S = $48 per order, and H = $2.00 per unit per month, ng

Question

If D = 8,400 per month, S = $48 per order, and H = $2.00 per unit per month, ng a) What is the economic order quantity? The EOQis[ units (round your response to the nearest whole number. b) How does your answer change if the holding cost doubles? The EOQ isunits (round your response to the nearest whole number). c) What if the holding cost drops in half? activ Obel ean o The EOQ is units (round your response to the nearest whole number), Enter your answer in each of the answer boxes. Help izlet Features 15 F6 F7 F5 F1 F2 F3 8 2 3 4 6

Explanation / Answer

Economic Order quantity ( EOQ ) will be defined as :

EOQ = Square root ( 2 x S x D/ H)

Where,

D = annual demand

S = Ordering cost per order

H= Annual unit holding cost

Answer to Q1.

D = Annual demand = 8400/month x 12 months = 100800

S = $48 /order
H = $2 per unit per month x 12 months = $ 24 per unit per month

EOQ = Square root ( 2 x 48 x 8400/ 24) = 183.30 ( 183 rounded to nearest whole number )

EOQ = 183 UNITS

Answer to Q.2:

D = Annual demand = 8400/month x 12 months = 100800

S = $48 /order
H = $48 per unit per year ( REMARKS: HOLDING COST DOUBLES )

EOQ = Square root ( 2 x 48 x 8400/ 48) = 129.61 ( 130 rounded to nearest whole number )

THE EOQ IS = 130 UNITS

Answer to Q.3 :

D = Annual demand = 8400/month x 12 months = 100800

S = $48 /order
H = $12 per unit per year

EOQ = Square root ( 2 x 48 x 8400/ 12) = 259.22 ( 259 rounded to nearest whole number )

THE EOQ IS = 259 UNITS

EOQ = 183 UNITS

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