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lina2011 [118]
4 years ago
7

William​ Beville's computer training​ school, in​ Richmond, stocks workbooks with the following​ characteristics: Demand D = 19,

100 ​units/year
Ordering cost S = ​$26​/order
Holding cost H ​= $3​/unit/year
A) Calculate the EOQ for the workbooks.
B) What are the annual holding costs for the workbooks?
C) What are the annual ordering costs?
Business
1 answer:
Shalnov [3]4 years ago
8 0

Answer: EOQ =  575.38 units ≈ 575 units

Annual holding cost =$862.5 ≈ $863

annual ordering cost=$863.65 ≈ $864

Explanation:

a)the EOQ for the workbooks=\sqrt{ 2 X Demand x ordering cost / holding cost}

= \sqrt{2 x 19,100 x 26 / 3} = \sqrt{331,066.667}

=  575.38 units ≈ 575 units

b)the annual holding costs for the workbooks

Annual holding cost = Economic order quantity x Holding cost /2

                = (575 x 3)/2=$862.5 ≈ $863

c) the annual ordering costs = Demand X Ordering cost/ EOQ

     = 19,100 x 26/575

=$863.65 ≈ $864

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