Answer to Question #256720 in Management for Binx

Question #256720

Khuzawayo Construction a local sub-contractor expects to use 19 675 pockets of cement for 2021. Carrying costs are R 6.25 per unit and order costs are R 43.55. The organization works 315 Days per year. Determine:

3.1.1 The Economic Order Quantity (EOQ) (4)

3.1.2 The number of orders per year (3)

3.1.3 The length of the order cycle. (3)

3.1.4 The Total Cost of the inventory. (5)


1
Expert's answer
2021-10-26T21:04:02-0400

The economic order quantity, or EOQ, is a calculation designed to find the optimal order quantity for businesses to minimize logistics costs, warehousing space, stock outs, and overstock costs. The formula is: EOQ = square root of: [2(setup costs)(demand rate)] / holding costs.


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