Question

William? Beville's computer training? school, in? Richmond, stocks workbooks with the following? characteristics:

Demand D      19, 200 units/year

Ordering cost S     ?$24?/order

Holding cost H ?         $4?/unit/year

	?
	?

?a) The EOQ for the workbooks is

?(round your response to the nearest whole? number).

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

?(round your response to the nearest whole? number).

?c) What are the annual ordering? costs?

?(round your response to the nearest whole? number

Answer 1

a)The Economic Order Quantity (EOQ)

where D is annual demand, C_o is the cost to place a single order and C_c is the carrying cost per unit per year.

b) Since the ordering quanity is not given.We will assume that we place order with EOQ value.ie Q = 480 units

Holding Cost is $960

c)Annual Ordering cost:

Ordering cost = No. of orders per year * C₀

We can notice that at Economic order Quantity, the holding costs and ordering costs are equal.

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