An auto parts shop carries an oil filter for trucks. The annual demand for the oil filter is roughly 1200 units. The ordering co
1 answer:
Answer:
The answer is the economic order quantity is 400 units.
Explanation:
For this question, we apply the economic order quantity (EOQ) formula developed by Ford W. Harris in 1913, to find the answer. The formula is shown as below:
EOQ =
in which: EOQ: Economic order quantity; D: Annual Demand in units; S: Cost per order; H: Annual holding cost per unit.
So by substituting the information we are given in the question, we have: D = 1,200 units; S = $80 and H = $1.2. Thus:
EOQ = = 400 units.
So, the economic order quantity is 400 units.
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Answer:
The EMV for option a is $5,679,100
The EMV for option b is $5,719,200
Therefore, option b has the highest expected monetary value.
Explanation:
The EMV of the project is the Expected Money Value of the Project.
This value is given by the sum of each expected earning/cost multiplied by each probability.
So
a) proceeding immediately with production of a new top-of-the-line stereo TV that has just completed prototype testing.
There are these following probabilities:
77% probability of selling 100,000 units at $610 each.
23% probability of selling 70,000 units at $610 each.
So
(b) having the value analysis team complete a study.
There are these following probabilities:
74% probability of selling 85,000 units at $720.
26% probability of selling 70,000 units at $720.
The cost of value engineering, at 120,000. So this value is going to be dereased from the EMV.