Question

Need It ASAP!!!!!

Wang Distributors has an annual demand for an airport metal detector of 1 comma 400 units. The cost of a typical detector to Wang is ​$400. Carrying cost is estimated to be 18​% of the unit​ cost, and the ordering cost is ​$27 per order. If Ping​ Wang, the​ owner, orders in quantities of 300 or​ more, he can get a 7​% discount on the cost of the detectors. Should Wang take the quantity​ discount? What is the EOQ without the​ discount? EOQ​ = nothing units ​(round your response to one decimal​ place). Since the total cost with the discount is ▼ less than greater than the total cost without the​ discount, Wang ▼ should should not order 300 units at a time in order to qualify for the discount.

Answer 1

SOL:-

DEMAND = 1400
ORDERING COST = 27
HOLDING COST = 72
COST PER UNIT = 400

1. EOQ = SQRT(2 * DEMAND * ORDERING COST / HOLDING COST) = SQRT(2 * 1400 * 27/ 72) = 32

2. ANNUAL HOLDING COST = (EOQ / 2) * HOLDING COST = (32 / 2) * 72 = 1152

ANNUAL ORDERING COST = (DEMAND / EOQ) * ORDERING COST = (1400 / 32) * 27 =1181.25

ANNUAL MATERIAL COST = ANNUAL DEMAND * PRICE PER UNIT = 1400 * 400 = 560000

TOTAL COST OF INVENTORY = ANNUAL HOLDING COST + ANNUAL ORDERING COST + ANNUAL MATERIAL COST = 1152 + 1181.25 + 560000 = 562333.25