Answer to Question #263896 in Management for Sepa

Question

Demand D = 18,500 units/year

Ordering cost S = $26/order

Holding cost H = $4/unit/year

a) Calculate the EOQ for the workbooks.

b) What are the annual holding costs for the workbooks?

c) What are the annual ordering costs?

Answer 1

Daily demand = 60000/240 = 250 If lead time = 3 days (lead time < time between orders) Reorder point = (60000/240)x3=750 Reorder when inventory on hand = 750