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4 years ago

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

Business

2 answers:

777dan777 [17]4 years ago

8 0

Answer:

a) 493.71

b) 987.42

c) 987.42

Explanation:

a) The formula for Economic Order Quantity (EOQ) is :

EOQ = $\sqrt{2DS/H}$ where

D : Demand in Units (typically on annual basis)
S : Order cost (per purchase order)
H : Holding Cost (per unit, per year

Therefore EOQ = $\sqrt{\frac{2*19,500*25}{4} }$

EOQ = 493.71

b) Annual Holding Cost= (Q * H) / 2 = $\frac{493.71*4}{2}$ = 987.42

c) Annual ordering cost = (D * S) / Q = $\frac{19500*25}{493.71}$ = 987.42

Elanso [62]4 years ago

3 0

Answer:

a. Calculate the EOQ for the workbooks = 493.71 units

b. What are the annual holding costs for the workbooks? = $987.42

c. What are the annual ordering costs = $987.42

SOLUTION

FORMULA FOR CALCULATING ECONOMIC ORDER QUANTITY IS

a. EOQ = √2 X D X S/H

Where:

Demand D= 19,500 units/year

Ordering cost= $25/order

Holding cost H = $4/unit/year

∴ EOQ = √2 x 19,500 x 25/4

= √39,000 x 6.25

= √243750

EOQ = 493.71 units

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

Holding cost H = $4/unit/year

Annual Holding Cost = 493.71/2 x 4 = $987.42

= $396,000.00

∴ Holding cost H = $396,000.00

c. Find the Ordering Cost = $25/order

Annual Ordering Cost = 19,500 /493.71 x $25 = $987.42

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

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