The maintenance department of a large hospital uses 900 cases of liquid cleanser

Question

The maintenance department of a large hospital uses 900 cases of liquid cleanser annually. Based on the supplier's price schedule, the purchasing manager has calculated the corresponding EOQ as follows. What are the possible optimal order quantity? 3. A toy manufacturer uses 125,000 rubber wheels per year for its popular dump truck series. The firm makes its own wheels, which it can produce at a rate of 800 per day. Holding cost is $2 per wheel per year. Setup cost for a production run of wheels is $75. The firm operates 250 days per year. What is the annual holding cost if the total cost-minimizing lot size is used?

Explanation / Answer

2. The optimal order qty should be 199, 200, 250, 300, 400 respectively to get the benefit of lower price slab.

3.

D 125000 P 200000 H 2 S 75 EPQ =(2*D*S/H/(1-D/P))^0.5 5000 Annual Holding Cost = 1/2*H*Q*(1-D/P) = 1875

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