William Beville's computer training school, in Richmond, stocks workbooks with the following characteristics: Demand D 19 comma 900 units/year Ordering cost S $27/order Holding cost H $3/unit/year a) The EOQ for the workbooks is nothing (round your response to the nearest whole number). b) What are the annual holding costs for the workbooks? $ nothing (round your response to the nearest whole number). c) What are the annual ordering costs? $ nothing (round your response to the nearest whole number).

Question

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Respuesta :

andromache andromache · Answer 1 · 2020-04-05T04:29:57+02:00

Answer:

a. 598 units

b. $897

c. $898

Explanation:

a. The computation of the economic order quantity is shown below:

[tex]= \sqrt{\frac{2\times \text{Annual demand}\times \text{Ordering cost}}{\text{Carrying cost}}}[/tex]

[tex]= \sqrt{\frac{2\times \text{19,900}\times \text{\$27}}{\text{\$3}}}[/tex]

= 598 units

b. The average inventory would equal to

= Economic order quantity ÷ 2

= 598 units ÷ 2

= 299 units

Carrying cost = average inventory × carrying cost per unit

= 299 units × $3

= $897

c. The number of orders would be equal to

= Annual demand ÷ economic order quantity

= $19,900 ÷ 598 units

= 33.28 orders

Ordering cost = Number of orders × ordering cost per order

= 33.28 orders × $27

= $898