Answer to Question #214773 in Management for Adi

Question

if demand is 75 lakh setup and holding cost is 29 and 35 number of piece per order is 2.3 lakh printing is done 300 days and delivery within 2 days what is eoq?

Answer 1

Answer:

Given that

Annual demand = 75 lakhs per year

Setup cost = $29 per unit

Holding cost = $35 per unit

Number of pieces in one order = 2.3 lakhs

Working days = 300 days

Lead time = 2 days

The formula to calculate EOQ is

EOD= $\sqrt{2SD \over H}$

Here, S = order cost

D = annual demand

H = holding cost

Substituting the values,

EOD= $\sqrt{2 \times 29 \times7500000 \over 35}$

EOD= $\sqrt{12428571.42}$

EOD= 3525.41