Question

A retail outlet for calculators sells 700 calculators per year. it costs ​$2 to store one calculator for a year. to​ reorder, there is a fixed cost of ​$7​, plus ​$1.65 for each calculator. how many times per year should the store order​ calculators, and in what lot​ size, in order to minimize inventory​ costs?

Answer 1

Answer:

Times to order:  10 times

Lot size to order: 70 calculators per order

Explanation:

Economic Order Quantity is the quantity that minimizes inventory relevant cost-holding cost and ordering cost.

So the number of times to order per year in order to minimize inventory costs can be obtained by using Economic Order Quantity (EOQ) formula:

EOQ= $\sqrt{2OD}/H$

O= ordering cost per order, D = Annual demand and H= holding cost (storage cost)

EOQ = $\sqrt{2*7*700}/2$

EOQ= $\sqrt{9800}/2$

EOQ= $\sqrt{4900}$.

EOQ= 70 units.

So the number of times to order per year to minimize inventory cost is given by dividing annual demand by economic order quantity :

      Annual demand (D)

=     _____________

            EOQ

       700

=     ___

       70

=  10 times.

Answer 2

Answer:

if Andre orders 500 boxes at a time his anual inventory cost with holding cost included should be $150,030.

Explanation: