The annual requirement of a part is 360.000 units. The order cost is $120 per or

Question

The annual requirement of a part is 360.000 units. The order cost is $120 per order, the holding rate is 12 percent and the part cost is $2,500 per unit. What are the (a) EOQ. (b) annual holding cost, (c) annual order cost, and (d) annual total inventory cost? The weekly requirement of a part is 950 units. The order cost is $85 per order, the holding cost is $5 per unit per year and the part cost is $250 per unit. The firm operates fifty-two weeks per year. Compute the (a) EOQ. (b) annual holding cost, (c) annual order cost, and (d) annual total inventory cost. The monthly demand for a part is 1,500 units. The order cost is $285 per order, the holding cost is $56 per unit per year and the part cost is $850 per unit. The firm operates twelve months per year. Compute the (a) EOQ. (b) annual holding cost, (c) annual order cost, and (d) annual total inventory cost. Icy Snowmobile, Inc., has an annual demand for 1.200 snowmobiles. Their purchase cost for each snowmobile is $2,500. It costs about $250 to place an order, and the holding rate is 35 percent of the unit cost. Compute the (a) EOQ. (b) annual holding cost, (c) annual order cost, and (d) total annual inventory cost.

Explanation / Answer

QUESTION 3 ANSWER IS

(a) EOQ = SQRT(2*quantity*cost per request/conveying cost per request)

amount = 360,000 units. taken a toll for every request = $120. holding or conveying cost = 12% of part cost = 12% of 2,500 = $300

EOQ (utilizing the equation) = SQRT (2*360,000*120/300) = 537 units.

(b) Annual holding cost: 12% of 2,500 = $300 per unit every year. Normal stock held = (0+537)/2 = 268.5 units

Yearly aggregate expenses = 268.5 units*$300 = $80,550

(c) number of requests = yearly request/EOQ = 360,000/537 = 671 requests

fetched per request = $120. yearly requesting cost = $120*671 orders = $80,520

(d) yearly aggregate stock expenses = requesting costs+holding costs

80,520+80,550 = $161,070

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